Have you tried contacting the seller about what format the video should be in? Ask them if they can also send you a sample file so you can see what the settings are for that file. That's the easiest way, that way you've got a good starting point.
I think you should really try Windows XP for the sake of the software to see if that makes a difference. Given your concerns about it, what about dual booting Win XP with your Win 98 but make sure you turn off your network card in Win XP instead so it doesn't connect to the net.
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