Something is writing into the VMM.DLL (Virtual Machine Manager)that's corrupting it. Are you using a recovery and restore disk from HP or just the win98 CD? If you originally upgraded the system from win95 and are using those drivers that may be theproblem.
If using just the win98 disk are all the drivers for the computer included or do you have to use 3rd party drivers? To get the current drivers for the PC go to the following site.
http://www.hp.com/cposupport/swindexes/pv8160_swen.html
If your starting out with a clean install of win98 you shouldn't get this error unless you've had to use third party drivers or have added software to the system. Or in otherwords does this happen the "FIRST" time you boot after completing installation of win98?
You can run msconfig and select system file checker from the tools menu. Run that and extract/restore an original VMM.VXD file from the