This can be temporarily fixed by using the Tweak UI repair icons function.

It is one of the power toys from microsoft.

Tweak UI is on the windows 98 CD:
D:\tools\reskit\powertoy
substitute the drive letter of your CD ROM drive for the D.

As of 3/30/1999 it was also available at
http://www.winmag.com/win98/software.htm

Another option is to change the registry to allow Windows to handle more icons.

Download fixicocg.zip, extract the file fixicocg.reg and double click on it to install the change.

Many people have also reported that installing Internet Explorer 5 solves this as well.