I installed a fresh copy of Windows98SE on a new Virtual Machine and found a few interesting things.
On the cloned VM, windows wants to install Ultra ATA drivers for the hard drive.
On the fresh install, windows installed IDE drivers and not Ultra ATA.
Seems like that could be a clue as to why the cloned VM is having so many issues.
Any idea why the cloned VM wants Ultra ATA drivers but the fresh VM doesn't?