I'm very familiar with Win98 memory issues. I used to have big problems with the display pausing for a couple seconds while playing games, but everything kept running in the background. Not a good situation when playing racing games.
I'd suggest following Blobrana's advice. If you're running a freshly installed system and having slowdown issues, it's usually related to memory management or a bad driver.
Do you know what chipset is used in your motherboard? You may be able to get an updated chipset driver. Bad drivers will cripple any OS.
Now for the rant...
@Frags: I agree 100%. I've used Windows since 1995 and have never had a virus, malware, spamware, or any of that crap. I have a router with a NAT, and that's it. It's not a miracle. It's called common sense. I fix computers all the time, and systems bloated with viruses always have garbage like CometCursor, AOL, Weatherbug, and something that has "Jukebox" in its name. That tells me those peope are compulsive downloaders. If you only use a system for poker, then you don't need any toolbars, "tune-up" programs, or any other such crap.
Ironicly, Norton Antivirus deleted my entire e-mail archive about 3 months after I installed it in 2001. I never used any anti-virus ever again. Also, that was on my Win2000 system, which I hadn't re-installed until two months ago when I updated to XP.
If you have a router, the only way I know of for a virus to get on your system without you explicitly downloading something is through an ActiveX control. You have two options. In IE, go to the Tools menu, select Internet Options -> Security -> Custom Level, and then set "Download signed ActiveX controls" to "Prompt". The other option is to use Firefox or Opera. However, I have come across a few web sites that requested that I install some XPI plugins to view the site. Don't ever do that. Even Firefox is not 100% immune to malware.