Strange win98 problem

I've recently put togethter an AMD1.33 based system and been doing fine with exception of a bizzare problem that causes me to lose control of the keyboard and mouse for a few seconds. It wouldn't be a problem in normal use but games it is. Games don't always recover from this and sometimes I don't get control back or system simply hangs after a while. It is a win98 system, latest patches, DX8, either Asus GeForce3/64 or MSI GeForce2MX/32(I tried asus and Detonator 2.90 drivers), MSI K7-266Pr, 3com net card and SB-Live/Value, USB Logitech mouse and USB MS keyboard, 512RAM, no overclocking . I think I've disabled just about feature I can think of that may cause this (no power management, no S.M.A.R.T for hdd, no monitoring of any kind) but this keeps happening. I am out of ideas to what may cause it at this point. Has anyone seen something similar?