Reinstall the modem driver followed by the TCP update. If that doesn't work, swap the functional modem from the $2 unit. To improve boot time try to disable the power on 'memory self-test' in the bios.
The instructions are for installing Windows 98 using the original CD. Perhaps Case Four will instruct how to extract ESDI_506.PDR into the contents of the win98 folder copied from the CD to another partition on the harddrive.
Thank You Tihiy for making IPTest available. If I set Network Status to Disable and restart, it is again automatically Enabled. Is it possible with your utility to maintain 'Disable' during startup?