no domain controller

lets see I have several win 98 se machines.
and had issues with shares and not seeing all of the shares.
You can upgrade your machine to win 2000 the easiest way.
the other way is just to keep the asigned address.

i think either it can't talk to the dhcp server or else you just need to release and renew the ip address...
try this:
set win98 client to dhcp. reboot.
Start/Run/winipcfg
highlight the network adapter, pick release all
then renew all.that might fix it. if not, you will get an error that it can't talk to the dhcp server. check to see that the gateway is set correctly
see if you can ping the dhcp server.
if you can, and all ip settings look good, uninstall the tcpip protocol (i'd uninstall and reinstall the nic driver just for good measure)

If answer # 1 doesn?t solve the problem more info is needed. Has this box ever logged in? If yes, what changed? After your Win98 box attempts to log in, what IP address is received? An address beginning with 169.254.x.x means your Win98 box isn?t connecting to the DHCP server. If your network is segmented, is the DHCP assigned address for the correct subnet? Are your using ICS or NAT? Are any other boxes having difficulty? Is the box shown in AD? There can be any number to configuration problems that will cause the symptoms your describing.

Go into Network and Dail-up Connections

Then select the Advanced menu item

Then select Advanced Settings

On the Adpater and Bindings tab make sure the correct network adapter that DNS is using is at the top.

If all the previous recommendation do not work: Right click my Network Neighborhood, Click Properties - on configuration tab look for your network card, highlight it (one mouse click), then click Properties Tab, Click Wins Configuration Tab, then select Use DHCP for WINS resolution. But before that,be sure to assign your Win98 the Obtain IP Address Automatically, option.

Okay - first of all check your DHCP server, and see if it is integrated with DNS. Also check the IP addresses for in the DHCP server records. You said you have two nic cards, but I suppose you use only one of them for your LAN - the other one is fora NAT or router. Go check on your W98 clients what addresses they receive from the DHCP server. You check that by typing ipconfig /all. See if they get the IP addresse from the class you intend to use for the LAN. If not, you have to create on the DHCP two scopes. One for the LAN class and one for the Router class. Restrict on the Router class scope the lease for of addresses for the clients. Hope that my answer will help you.

Hi,
As the other answers doesn't solve your problem. Lets diagnose the issue from the scratch.
1) As you said that if you give a static IP then the pc is login in to the domain. This make clear that its not getting IP address from the DHCP server. Check in the DHCP server whether you have any scopes/subnets defined in it or your DHCP is authorised in Active directory or not to distribute IP addresses to clients. More over, why you are using WINS as well as DNS. Use either of them. To check whether ur DHCP server is authorised in A.D. after configuration, open DHCP console, there will be DHCP, expand it and then your server name appears, then right click and see that ur getting an option "AUTHORISE" or you are getting "UNAUTHORISE". If you are getting unauthorise option that means your DHCP is authorised in A.D. and just see its showing Green arrow pointing upwards as this will let u know the status of the DHCP server.
2) Having two NIC's not a problem but the thing which matters is which one is in use and conneted to your switch.
3) To me the problem is clearly with the DHCP server because if there is a static IP assigned to ur 98 machine you are able to login to the network and when you make ur machine to get IP from DHCP,you PC cannot connect to login because of unavailability of IP address.

Hope this will help you diagnose the issue.