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Windows 98 is your best bet with those system specs.
You don't need a cable DSL/Router using 2 windows 98 and dialup - in fact, it would be a waste of money if you did.
just get a crossover cable and connect both computers directly using a crossover cable. The crossover cable connects to network cards - if you don't have network cards, install them first.
Then setup ICS on the computer with the modem as the server.
This is your cheapest alternative and pretty much your best alternative with Dialup. I used to recommened a product called Webramp to my clients - but they are no longer in business last I checked.
Good luck
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