Microsoft's answer:

Msgsrv32.exe Stops Responding and Then the Computer Stops Responding

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The file Microsoft msgsrv32.exe or msgsrv32.dll is a file located in the C:\Windows\SYSTEM directory placed on the computer during the Windows installation. The description of this file is "Windows 32-bit VxD Message Server" and is responsible for such Windows tasks as:

Handle Plug and Play messages between various parts of the operating system.
Handle responses to and from setup programs.
Display the initial logon dialog box if a network is present or profiles are enabled.
Play the system startup and shutdown sounds.
Load the Windows drivers at startup and then unload them at shutdown.
Run the shell program.

Cause:

Errors or issues relating to msgsrv32 can be caused by any of the below possibilities.

Resource conflict or issue
TSRs or other running programs
Sound driver or sound card issues
Onboard sound or video issue
MIDI device or codec issues
Power Management or screensaver issue
Microsoft Find Fast related issue
Memory manager being used
Issue with shell
Computer virus
Bad hardware

My suggestion on this is to first check the device manager and make sure all hardware is working properly....there are no yellow exclamation (!) or red X's (X)
If there are then these must be fixed either by uninstalling the hardware (drivers) or updating/reinstalling the drivers.

Then I would look into uninstalling the screensaver program (as you think this may all ready be a cause) you might try this first!

Repairing shell issues require a lot of DOS knowledge and registry editing and is easiest fixed with a new reinstallation