Checking the settings
Infra Red is working on my W98 laptop, an old W95 laptop, and my W98SE desktop. I think it might be helpful to show what the machine settings are for these working installations. If your settings do not match, then at least you have some clues about which elements to try to alter.
The settings differ for W95 and for W98, and the settings differ for 'built in Infra Red' and for 'serial port adapters'. I have listed the settings for: