Do you have two anti-virus programs installed on the same machine? I did that once and that produced massive strange behaviour. Even if one of the engines was not loaded (or so it seemed) uninstalling one put my system back to normal. If you have two installed, I would suggest you uninstall one of them.
To try to work around this issue if your computer is not infected with the W95.MTX or Matrix virus, replace the Wsock32.dll file by using the appropriate method.
Windows 98 or Windows 98 Second Edition
To extract files in Windows 98 or Windows 98 Second Edition, use the System File Checker tool:
Quit all running programs.
Click Start, and then click Run.
Type sfc, and then press ENTER.
In System File Checker, click Extract one file from installation disk.
In the Specify the system file you would like to restore box, type Wsock32.dll, and then click Start.
In the Extract File dialog box, type drive:\Win98 in the Restore from box, where drive is the drive letter of the CD-ROM or DVD-ROM drive that contains your Windows 98 CD-ROM, and then click OK.
In the Backup File dialog box, click OK. If a The backup folder does not exist. Do you want to create it message appears, click Yes.
When you receive an “Extract File” message, click Yes to restart the computer.