Was the machine upgraded to Win98SE or was a complete istallation done ?
One possible problem could be the mouse driver, try deleting the mouse and reinstalling it. If you can't get into the system applet in the control pannels using your mouse try these steps;
1. Press CTRL+ESC, use the arrow keys to select Settings, Control Panel, and then press ENTER.
2. Use the arrow keys to select System, and then press ENTER.
3. Use the arrow keys to select the Device Manager tab, and then press the TAB key to select Computer.
4. Use the arrow keys to select Mouse, use the RIGHT ARROW key to expand the Mouse branch, and then select blank mouse entry.
5. Use the TAB key to select Remove, and then press enter.Then restart the computer.
6. When the sysem boots up it should auto detect the mouse and prompt you to install it. You will need to use the keys as described above to navigate through the menus.
It may be a good idea to look for an updated driver for the mouse before you begin. If you find