asiliat : 98SE is a lot better for gaming than XP IMO. *AFAIK, XP generally slow games down by several FPS, from overhead, etc. *If your machine is just meeting recommmended (not just required) specs, that will do you some good.
As for your question, what version of DX is currently installed in your system? *Click START > Run > then type 'dxdiag' without quotes > OK
Note DX version, if it's earlier than 8.0a, try installing that first.... *I know this is stupid, but it's worth a try I guess.
Have you done other tweaks to the OS, I found out that I messed up my copy of ME beyond recovery (I couldn't even d/l any updates from MS) until I cleaned format and reinstalled ME from scratch (not using a 'recovery' CD to restore OS).
Try 8.0a first before 9. *Even if you've got 8.0a, try reinstalling it anyway, it'll repair anything you've accidently deleted, etc.
Good luck. *
[Disclaimer]I am not Tech support for MS, so I may be talking out of my ass.[/Disclaimer]