Since you said the LED doesn't light, it does sound like you do have a cabling/ setting/ hardware issue.
On the 98SE side, go into Control Panel- Network. Find and highlight the device which is your LAN NIC. Now choose Properties. Now look for Advanced, this is usually where the speed/duplex settings are, if this is a relatively modern 10/100 card. It may try to update the NDIS driver module when you change this. You will need to reboot your machine after this.
Usually your choices are: Auto Detect, 100/Full, 100/Half, 10/Full, and 10/Half.
Different firedrill on the 2000 side; go into Control Panel, then Network and Dial-Up Connections. Right click on Local Area Connection and choose Properties. Now at the top click on Configure. Again look for Advanced tab. Find and choose Link speed and duplex.
Make sure to set both ends to the same Speed+Duplex setting; you MUST do this when using a crossover cable. First choice might be Auto Detect, but if that doesn't work, choices in order of best to worst would be Auto, 100/Full, 10/Full, 100/Half, 10/Half. if Auto doesn't work, then skip to the next choice in this list.
10/Half is the lowest common denominator. Also 10/Full is not run very much so could be buggy. If one side or the other has NO configurable settings, then if it's a relatively old LAN card it's probably 10/Half. If you are using a hub instead of crossover, chances are it's 10/Half. If you are using a newer Linksys Router, you should set either to Auto, or 10/Half only if Auto won't work.
After all this, with both systems started or restarted, you ought to have a good LAN connection betwen.
But there's a bit higher-level work to do still...
Let's say you want to mount the 2000's disk from 98. Once you have a good connection, the other thing you will need to do is tell 98 what the IP is for your 2000 machine, so the 98 can find it on your little "net". This is easy with static IP's, or if you are using a Linksys router which does DHCP (i.e machine(s) are set to "Obtain an IP Address Automatically").
For exmple of a Linksys, create or edit your C:\WINDOWS\HOSTS text file on the 98SE side. It will need to contain the name and IP of the other system, like this:
127.0.0.1 localhost
192.168.1.101 sys2k
where the IP and sys2k are whatever IP you have on the 2000 side. The static IP would be the same way. But if both sides are set for DHCP and you do not have a router to help you, you will probably have to temporarily assign some made-up IP's to these machines, like 192.168.100 (for 98) and 192.168.1.101 (for 2000).
Then you should be able to go onto 98, click Start- Run, then
ping -a 192.168.1.101
and get some responses.
If so, then now on 98 do My Computer- Tools- Map Network Drive- then choose a drive letter like T: and tell it to connect to path
\\sys2k\C$
(or whatever computer name identification your 2000 is using). If the target drive on the 2000 doesn't have Sharing enabled, you will need to enable that sharing first, and give it a share name like C$.
I did something exactly like this yesterday, to copy 7GB of data from my old 98SE box to my new XP box, through my Linksys, at 100/Full-- it took 30 minutes. I could not connect successfully until I did the HOSTS thing.
Anyway maybe this will get you further. Or more likely it could also create MUCH more hassle for you if you don't enjoy tinkering with the network stuff.
-clintfan