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I wonder if this is what has really broken 4.8 on 98? The swap file size during a VPS update seems to reach about 1.5GB, very large, yet the limit for 98 is 2GB, so not yet at breaking point. Also, files up to 2GB are no problem (FAT32), even up to 4GB with the right patches, so ~200MB is nothing remarkable.
If 4.8 can handle these large VPS files under W2K+, then in theory, it should also be able to under W98, unless either different binaries are actually installed for the two OS (with different capabilities/limitations) or an updated dll (or such) breaks compatibility.
Joe.