I had a similar problem with my Windows'98 installation and from what you told me i can hardly say that it's a hardware problem, so we'll focus on the Software side.
TRY THE FOLLOWING PROCEDURE STEP BY STEP (I mean it !!!)
0. Turn off your computer.
1. Remove the Modem (Internal / External).
2. Boot your computer.
3. Remove the Hardware from the System Hardware list.
4. Reboot your computer.
5. Write down every component that is installed at the SETTINGS>NETWORK tab and then remove all Protocols, Services & hardware in the list.
6. Reboot your computer once (Ignore the <NEW HARDWARE FOUND> wizzard if it appears).
7. REBOOT AGAIN your computer (MUST BE DONE !!!)
(Ignore the <NEW HARDWARE FOUND> wizzard if it appears)
9. Check the System Hardware list for devices that don't
work or have IRQ and MEMORY conflicts or don't have the propper drivers installed and fix them by either installing the propper drivers or by disabling them.
10. If you made changes if the Hadware List then REBOOT.
NOW FROM THIS POINT STARTS THE MAIN INSTALLATION ...
A. If you have an internal MODEM try hooking it at a different SLOT (PCI / ISA), make sure it is secured and REBOOT your computer. If you have an external modem then try connecting it at another Serial port and make sure that the BIOS has the propper adresses for the COM ports (refer to the M/B manual).
NOTE: If Windows doesn't recongize the device then SHUT DOWN the PC wait 20sec and REBOOT again. A funny thing about windows'98 is that for every new hardware you install they must be restarted at least two times before actually seeing it (Some times even 4 times).
B. If windows perform the installation automatically then Ok, if windows don't see the hardware then procceed with manual installation.
C. COLD REBOOT your PC.
D. Now go to the Network Settings and install the Hardware that is for Telephone Calls (you must have written it down before you removed the components) and the (TCP/IP) for that hardware (if it isn't automatically installed).
E. REBOOT your PC.
F. Go at network settings again and install any other additional services or hardware.
G. REBOOT.
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If the above procedure doesn't work you can always try running the SETUPCOR.EXE on your Windows'98 installation CD. This will replace all the Kernel & other library modules on the OS with the original ones without destroying any settings, installed programs or registry entries.
CAUTION: The above statement is classified as "USE AT YOUR OWN RISK". You're the one that is going to decide if this action is RISK-FREE. I'm simply offering a piece of advice based on past problems that i've encountered.
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I hope i've been helpfull enough.
ARISTON Engineering Ltd
Michael Vezyrgianopoulos
R&D Manager