Hi Barry,
My setup is slightly different than yours but hopefully similar enough to be relevant. I have W98 and Mandrake 8.0
Although I have read that using static local IP numbers should work, I have had no success getting a Windows client to share a connection unless DHCP is enabled on the box with the modem attached. It has then been successful with Internet sharing installed in either Mandrake or Win98. (And, for that matter, using Freesco - linux-based router on a floppy).
On the Windows client machine, have TCP/IP installed and bound to the NIC and then to have the IP Address property set to be obtained automatically. All this is of course done in the Network Control Panel. (Apologies if I'm stating the obvious).
WINS is disabled but I do have the default gateway set to the IP of the PC which has Internet Sharing/DHCP installed.
FWIW I also have the IP of the NIC set in the Control Panel and for good measure also have a hosts file in the windows directory. I do not know if this is necessary or not as I put it there during earlier static-IP-based attempts and have not seen any reason to remove it.
I do not have either netbeui or IPX installed as they are not required and they should certainly (AFAIUI) not be bound to the NIC as I have read that this could be a major security hole.
Hope some of this may be of some use. As I wrote above, after a lot of faffing about the only way it would work at all for me was with DHCP but once that was enabled it all worked very smoothly.
Regards Syd