Far as I know it should indeed be backward compatible with PCI-E 1.0. Theoretically, this could reduce your overall performance. But it should work.
The 9800GTX does require a 6pin power connector be attached to it. Have you connected this? (usually it squeals very loud if you don't). You may also want to take a look at your BIOS settings on your motherboard just to make sure there aren't any issues there. (Also, are there any BIOS updates for your motherboard?)
Do you have the 9800GT or 9800GTX?