It sounds to me like your file association for .xls files has lost the location of excel.
in explorer, locate an excel file, right click on it, select open with then rather than selecting excel from the application list, click browse and track down your excel.exe application. select this and you should be ok from there.
If you don't have an open with option (I can't remember if its there in 98se in explorer, select tools-folder options - file types then find microsoft excel worksheet (.xls) click edit, select the open action, click edit, click browse and again track down the excel.exe application file. ok all the way back and that should reset the association.