I think the best way to get this fixed (and I don't think it's a virus) is to reload Windows 98 over the top of your existing installation. Get a Win98 bootdisk from here:
www.bootdisk.com and whack your Win98 cd into the drive. Make sure when you get to the bit where it asks where u want Win98 to be installed, you tell it the same directory as you currently have it installed in.
I think this will replace the corrupted parts of your installation and return your PC to sweet harmony :-)