" I want to connect pc running win98 with pc running winxp to share internet connection. "
Is the internet connection broadband? If it is, I would be tempted to use a WiFi router.
You could hardwire the desktop with windows 98 and use either the built in Wifi of the laptop ( most do have it ) or use a usb WiFi dongle to connect to the router. This would give you maximum flexibility of the laptop, yet ease of connection to the windows 98 machine.
I do know that with windows 98 and XP. Bridging the void via rj45 cable can be a pain. In most circumstances software is needed for 98, thats what I found the easiest.
i did have some software to bridge the gap, I may have disgarded it, I'll go and have a look.;-)