The first thing to do is rename your CONFIG.SYS and AUTOEXEC.BAT files and reboot. Any driver that won't work with your current board, may cause Windows to be confused (highly technical term). If the wrong drivers are there, then Windows doesn't know how to handle them or if they aren't Win98 compatible, you will get that problem. That's the first step.
If you don't have the CONFIG.SYS or AUTOEXEC.BAT files, check the documentation for a proper driver. Since you can't get the CDROM to work, you may have to copy some drivers from another computer to a floppy, assuming, of course they will fit.
The last thing to check is whether a virus has gotten onto the boot sector. I found one and it plagued me for quite awhile and had the same problem. Of all places, I found it on the original, write protected disks of WIN 3.1. Go figure.
If you can boot from the WIN98(se) bootable floppy that has the CDROM drivers and the CDROM works, then it's a problem with the configuration on the harddrive.
Try that.