Is your win2k machine running the DHCP service?
When Internet connection sharing is enabled, win98 also sets up a simple DHCP server. Having multiple DHCP servers on a LAN is against the rules, so if win98 detects one already exists when it loads, it disables connection sharing.
Also, many DSL providers supply you with software that doesn't work with connection sharing - because they don't want you to share it. If this is the case, check out <A HREF="http://user.cs.tu-berlin.de/~normanb/" target="_new"> RASPPPOE </A>