On win98 os.path.expanuser('~') does not result in a useable directory. The MSDN recommendation for user specific directories is the use of shell.ShGetSpecialFolder, so use it. For details see: http://msdn.microsoft.com/library/default.asp?url=/library/en-us/shellcc/platform/shell/reference/functions/shgetspecialfolderpath.asp

#!/bin/sh

hg init
echo foo > a
hg add a
hg commit -m "1" -d "1000000 0"
hg verify
chmod -r .hg/data/a.i
hg verify 2>/dev/null || echo verify failed
chmod +r .hg/data/a.i
hg verify 2>/dev/null || echo verify failed
chmod -w .hg/data/a.i
echo barber > a
hg commit -m "2" -d "1000000 0" 2>/dev/null || echo commit failed