What is causing This?

[Nightblade]

he only programs other than the OS running in the background when I play are the Virus protection and firewall.

Which antivirus and firewall are you using ?

Some antivirus and firewall are very heavy on ressource and nowadays absolutely not optimised for older computer. I learned this the hard way when i was a norton internet security user (that had both norton antivirus and norton firewall in the suite).

One of my system is running under window98 too, but the day i entirely removed the norton suite so no trace was present anymore on my system and on the advice of a frien i installed Zone Alarm version 4.5.594 (the best version for the OS window 98) and NOD32, i immediately noticed that my computer became more stable and responsive than it was when i was under the norton antivirus+firewall suite.

I can't say for other antivirus and firewall, but under window 98 if you are running norton products "up to date", it may play a very big part on your problems as while it worked nice years ago, the way the norton programs are working now is not old computer friendly anymore.