Dial-up trouble?

Have a computer that has a 56k modem for dial-up connection…Computer has Win 98SE.
Problem..

The Computer is on phone line is open and I am not dialed into the ISP. I am only on using other programs like word etc. Only have one phone linein house that the computer shares..so am not dialed in!
The telphone rings in the house for normal talking and when it does ring the computer makes a beep and then the whole system locks up.
Most cases I have to reboot by a manual shutdown with the power button to get computer to reset.
The compuer is not set up to use as a phone nor does it have a mic installed..So any ideas what is causing this?