I believe that you have a video driver issue.
Make sure that the BIOS settings related to the video card are correct. The optimum settings vary by card and MB. so you will need to review the manuals for both to define the best settings.
Boot into Safe mode.
Go to display settings, and apply the 16 color 640 * 480 mode.
Reboot.
Install the latest drivers for your MB / chipset.
Reboot.
Install Direct X, version 7a or newer.
Reboot, install the newest drivers for your video card.
Reboot.
If your monitor requires a special driver, install it when Windows finds the monitor.
You may also want to check with both the MB Video card mfg, for BIOS updates.
Another possability is that you have more ram than W98 can deal with. Tryreducing ram to less than 511MB, and see if that corrects the problem.