How much ram do you have? How many shared files do you have?
If you have a firewall, make sure it's been set up to allow LW full access; see Connection problems? Check here first! (click on link) in regards to software firewalls & modem/router NAT firewalls which require UPnP or port forwarding. I'm not sure if windows 98 supports UPnP which means if your connection device has a nat firewall, then port forwarding is the way to go.