U98SESP3 is not an all-or-none SP. It presents a long list of updates, modifications and add-ons from which you can choose the ones you want.
It is true that autoexec.bat and config sys are not needed for Win98SE, but they can be useful in the DOS mode. Therefore, I think that the question about the entry in config.sys is motivated. When starting in the DOS mode, there is also the message about “invalid command”. If I REM that line out, no such message comes. This concerns the line LH C:\Windows\COMMAND\MSCDEX.EXE /D:123 that is suggested in some texts.
My modified (maybe rather than f*cked up…) installation works well and obviously uses more RAM than the original one did. The mouse wheel does work, after all – only not in one or two simple applications. And I can read a DVD through an external drive connected to USB. I can read even big USB sticks.
Incidentally, the author of “How to install Windows 98SE on a modern PC” (http://www.vogons.org/viewtopic.php?f=8&t=41065#p384748 ) writes at the end: “Install unofficial 48-bit LBA patch from mdgx's site http://www.mdgx.com/files/ATADRV98.EXE. After in-stalling you can now re-enable 32-bit protected-mode disk drivers (clear the checkbox which you previously selected in last step), have DMA for HDD, and access your CD-rom drive. Personally couldn't use DMA for CD-rom drive. Had to use cd-rom drive via usb to avoid that problem. But it works fine without DMA.” I do not know if U98SESP3 installed that patch … but will try to investigate. Maybe that has to do with the problem in my case.
But in case someone has positive suggestions that help understanding what is supposed to be wrong in the entry in config.sys, and can also enable reading DVD also from the built-in drive in the laptop (that actually is a CD/DVD drive), I will be thankful. Maybe the latter problem does have to do with the MSCDEX problem in config.sys? Maybe MSCDEX.exe should be loaded in another system file?