The hardware is fine its the software try and find another service pack i think pack three is out if not then e-mail mircosoft they should be able to help either that or they will just send you useless bebble.
Another possible thing could be to reinstall blender.
Do you need 2000? if you are running it for server or admin stuff then keep it other wise you might want to look at another OS 98 is dodgy to many bugs for me but can run blender fine, i have ME and no problems.
Oh oh it could be the openGL driver for your graphics card i doubt it is but its a thought
Hope this helps you to get blender up and running again
me windows is pants actually its not pants but its memory managment is dont belive me u can see for yourself in blender. load blender load another program and close it load a few more programs and close them. and watch the availibly memory go slowly down.
xp is supposed to be much better but i have no first hand experiance