1) As far as Explorer saying the drive is in use, I have found this is nearly always due to the Zip drive being selected on the left, with the contents displayed on the right. Windows 2000 seems to count this as "in use". The solution is to highlight something else at the left (like your C drive), and then right-click on the Zip drive and pick format.
2) Using Iomegaware 2.2.1, I have a problem that seems consistant across the 4 or 5 computers I have installed on. When a user other than the one that installed the software is logged in and trys to log out or shutdown, the program IMGICON (or something like that) does not shut down, putting up the progress bar and the option to kill it. Anyone else seen this?