Your actually pretty good with what you have. I would personally like a bit more memory and hard drive space but I do a lot of graphics based stuff and i tend to pack rat stuff (thank you god for my 250gb hds
) Anyways.. theres no reason your computer should be acting up based on your system specs.. sounds most likely to be software.
Keep in mind that with win98 its still a good idea to defrag on a somewhat regular basis (every month or two unless you install/uninstall a lot). I think that all my win98 computers ran much better when i kept up on this.
good luck with it