I have the same problem and have been wading through all kinds of advice for 2 weeks now. Most people say "Drivers, it's your drivers" but don't give detailed instructions to support what they are saying.
Today I was told to check that my sound was set to Windows settings as opposed to MoBo manufacturers settings. Exactly how I don't know yet but I'm working on it. If I find the answer I'll be in touch, perhaps you will do the same for me. I will also try W2K instead of 98, and also a cheap sound card, but even if that works, I know neither will answer the first question.