I always assumed that it was a toy computer and that he just pretened it was real.
It could have been, thoguh I really think it was either an outdated model or something like that they gave him to play with.
I do not think he imagined anything. In that episode where they're writing music for the contest, he clearly knows the componants of a computer. Including Random Access Memory. Unless he's just really smart and can memorize things he hears on TV.
Muppet babies bothers me from the start with how the muppets didn't really know one another from the start it sort of messes with the muppets history of meeting one another in the muppet show and muppet movie but heck even some things in the muppet movie contradict the muppet show like schooter being with the band at the church but on the muppet show his uncle owns the theater. *shruggs*
AS I have said in the Skeeter thread, I felt that it's an alternate timeline, all in Miss Piggy's imagination. That explains why Skeeter doesn't exist outside MB and the Muppet Kids books. Not to mention that Animal and Gonzo are so close in MB, but you hardly even see them together. Not to mention how Bunsen had no assistant in the first season of TMS, but has known Beaker as a toddler. (unless you want to get technical and say he was a collegue sent in to assist him).
But I have another question. Did Scooter at one time or another say that he couldn't read? Maybe he can and they don't bring it up.