Odd... I'm running Win98 OEM, (with IE5.5 on top) and with the patches I've applied, I seem to have no problem with PnP USB on a Via KT400 based board with 6 USB 2.0's. (gigabyte GA-7VAXP)
Win98FE (due not there are a TON of different FE's) does have USB drives in it. I run win98FE and have a old computer with a 2 port USB. I don't know if it's just because it's 98FE and not SE, that u can't by default stick something into it and it'll load, but you have to reboot the computer in order to load the item.
Your MB has USB on it by default so it will load it no problem, can u plug in a device and get it to read? I know at least on my 2 port pci card it won't until I reboot. But 98SE is "supposely" more stable and has a few more useless utilties for netwokring and what not that are as I've said useless, but I guess the more "stable" part I guess what it needs.
But either way as I see it 98 and 98SE are basically the same, but SE as more junk added to it you'll never use (well I never did), they are both in my opinion stil extremly unstable, but they offer the most flexable OS than any other OS on the market. Screw Micorsoftly, I personally LOVE dealing with 98 and use it on my main computer that is up and running 24/7. Unstable, but hey it works! LOL Not that I can do too much as it's only a cyrix 166, but for the basic stuff I do it works plenty.