My computer slows when networked, why?

I have two computers, a Win 98 with a P-2 350MHz and XP Professional with a P-4 1800MHz. I have networked them via a hub using Cat 5 ethernet cable. Setting up and configuring the network was no problem . I ran into a snag with my Win 98 machine,in that when it is connected physically and configured in network neighborhood, it runs very slow. The pointer on the screen might take 5-10 seconds to move from one side of the screen to the other. It is sluggish and erratic. It is a chore just to align the pointer with whatever I want to click on. When I unplug the ethernet cable and unconfigure it in network neighborhood, it returns to normal again. (I cannot confirm if unplugging the ethernet cable actually does help, I just do it as aprecaution.) I am really mystified by this. I don't know how, but somehow the network causes the Win 98 machine to behave this way. The processor is not pegged out, in fact it registers normal readings for a computer just sitting idle, so I don'treally know what it might be? A friend told me that it might be a memory leak?

I don't know what other information might be of value that I could give in solving this, hopefully I have included all that is necessary.