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The story implies that the systems crashed because the power switch didn't work, and that when they were booted up again, the system didn't load the card-enabling software correctly. I may have misunderstood what they meant. I work closely with computers and have made bad assumptions about what people know about them before.
I suppose it is conceivable that the systems hibernated when the power switch was pushed, and when it was pushed again, the system came back up to where it was when the initial push happened. I can't imagine a stand-by causing the application to "disappear" and not load, but to still be able to recover the Windows state, and the article also implies that the systems performed an actual boot sequence, both of which imply a hibernation or off state. As far as it goes, these could be assumed to have been the root of the problem, but when a system comes out of hibernation, it starts up right where it was when it was put into hibernation, which means that the users would have had to close the program, which implies that they knew it COULD be closed, and therefore they should have known it COULD be launched.
The alternative is that which I outlined above... on startup, the app didn't load as it should have (again, these are single purpose machines).
Based on what I know about Diebold election systems (not as much as I'd like, I'm afraid), I'd guess that we're talking about a WinCE kernel, or a WinNT kernel, not a Win98 kernel (such as it is), simply because the system would need to have SOME form of security, and Win98 doesn't provide any. WinCE is a little better, but WinNT (as in Windows 2000, Windows XP and Windows Server 2003) actually has security built into it. These two kernels are also much less likely to hang at any point than Win98.
But even assuming a Win98 kernel (unlikely based on how they "update" their software), the systems would have had to have been in an unacceptable state at standby/hibernation or have failed to start properly, and that isn't a hardware problem, it's a software design flaw.
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