Nothing special required.
You just plug the wireless access point into the desktop PC's network card - you have Win98 already set to share internet connection. It may or may not require a cross-over cable depending on whether or not the wireless access point auto-detects.
You may need a wireless access point that allows another machine on the network to be the DHCP server. I think that Win98's internet connection sharing requires *it* to be the DHCP server.
Apart from that it should be pretty straightforward. This is no different to having a standard hub or switch with the desktop connected to the switch and the wireless access point also connected to the switch. You just take the switch out of the equation as you won't need one.
PS I can't answer your other question - will you need to upgrade the Win98 OS - as I don't know. Have never tried it.
If you're using ADSL, there's some pretty cheap wireless access points around that have built-in ADSL modems and a built in wires switch/hub also. That might be an all-in-one solution worth investigating.
[edited by: trillianjedi at 6:34 pm (utc) on Sep. 24, 2003]