A couple of things you need to check on...
1. You need to make sure that when you log in locally (to your Win98 machine), that you use the same name as when you log into the VPN server.
2. Are you IP addresses on your Win98 LAN restricted to the same network address space as the Win2K server's LAN address space? For instance, if you are restricted to having 192.168.1.XXX as your client's address, and you are also restricted to having 192.168.1.XXX as IP addresses on your Win2K LAN, the VPN will not work. (Note: This can be a restriction if both of your LAN's have a Linksys router). If this is the case, you need to change your subnet mask to 255.255.255.128 (for both LAN's), and have 192.168.1.(<128) addresses be used on one LAN, and 192.168.1.(>128) addresses be used on the other. That way, the VPN clients & servers can tell whether or not the address you are trying to connect to is a LAN address or a WAN address.
Confusing, I know.
e.