There are likey more than one issue causing your problem, first try the Windows direct program in the Windows folder, it's listed as "Control" in windows 98, as it's a open discription , I see no reason for it to be hidden in any case, if it is, then likely it's gone south, and you will have to reinstall Windows. Also some !@#$%^ programs made by mean folks will rewrite the V-Cache, to optomise their program , at the loss of all others, sooo find v-cache in System.ini , if it has settings there (Which it shouldn't) put in "AUTO" for the maximum setting , without the "" brackets, this is also a nasty way of virus writers to shut you out, but they set the minimum too low at times to fool you (It wont load the fat), it should be above 160. Be sure to run every Virus program you can lay hands on, as simply to reinstall over the current mess may not work if there is a nasty to rewrite it, but after you have satisfied all you suspitions about a virus or worm, reinstaling Windows over the current setup is not difficult as all you have to set in are the missing programs, if you can get the app to work you can run C:\WINDOWS\SYSTEM\SFC.EXE which is system file checker. There are a couple good registry fixers 98 uses, and First, if you've not expired the 5 day limit since the breakdown use Scanreg /restore (Read the instructions), the next is Scanreg /opt , which clears out dross and compacts it, But the first one should be Scanreg /fix, the "fix" option will attempt to repair the registry, then try the rest.
Well good luck, hope this info helps