I had the same problem with a new installation of an 80 GB HD.
Just resolved it this week.
The Win98SE disk installed a standard
VGA driver. This resulted in a display of only 16 colors at 640 x 480 resolution,
the same as operating in Safe Mode.
At first I thought the Monitor drivers were incorrect,
and then the display drivers for the Video card,VGA.
Found both, but only after trying almost every combination from the
Win98SE installation disk---big waste of time.
The best place to find any drivers that you need is at:
---> http://www.driverguide.com/
Turned out that the driver for the monitor was just a name card
to place the monitor name under Settings.
Didn't really matter if it said my monitor or
Windoze choice of Generic or default.
The correct video driver card is what made the difference.
This was not on the Windoze installation disk.
And, I had forgotten the name of my video-card,
which was nowhere on the card.
By copying all the numbers off of a paper-sticker on the card,
and submitting them to the search engine at DriversGuide.com,
the correct name came up along with free driver downloads.
Turned out the manufacturer had provided a CD with many drivers
for different applications, but I couldn't remember the name or
model NO. of my Video card! After finding it, I used the CD,
but I could have downloaded the correct driver from DriverGuide.
The card was a NVida RIVA 128/128ZX.
I also Spent a whole week trying different 3com/U.S. Robotic drivers
for the modem, along with windoze pseudo-help guide.
The problem was that I didn't have the driver for the
sound card installed, which had to be done in order for
the modem to work.
DriverGuide.com will have just about any driver that you need.