Should just put the CMOS pin from 1-2 to 2-3 for a few seconds and that would have cleared the CMOS instead of having to leave the battery out for 24 hours.
And yeah I think I can pretty much tell you why you can overclock right off the bat.
If you don't have a spot in the BIOS where you can lock the AGP/PCI bus (locking the AGP at 66MHz automatically locks the PCI so mainly you just need to lock the AGP frequency at 66MHz)
then you can't OC your CPU's FSB
The CPU:AGP:PCI are all on a ratio together.
A CPU with stock 133FSB has a CPU:AGP:PCI ratio of 4:2:1 which is in this case 133:66:33
Once you raise your FSB to 166 it becomes 166:83:41.75
The 83MHz is WAAAAAAY too high for an AGP bus frequency. This is why you always have to lock it at 66MHz because the AGP really doesn't like going beyond 72MHz or so.
You need a board where you can lock the AGP Bus if you want to OC the CPU through the FSB...otherwise your only option to raising the clock speed is upping the multiplier.
EDIT: The CPU should be fine though. I put my CPU at 2.8GHz with 2.225 Vcore which is the max my board could deliver and it survived that
I'm pretty sure his will be ok. Back when I didn't know ANYTHING about computers I simply set my 2400+ XP from 133 to 166 thinking 'well if 133 is good 166 is better' and it survived that