No truth, it will work fine with Win98SE and ME.
I use both of these, as well as XP with broadband with no problem what so ever.
I reckon the retailer was trying to sell you a new PC. If it were me I would never use him again.
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Synology invites you to visit them at Insomnia on 26th – 29th August. Book your tickets now and visit Synology.