I'm pretty sure peter nail this one, the subnet issue is probably playing havoc with what Win98 can deal with. Changing the empeg over to 192.168.1.2 and the NIC to 192.168.1.1 sounds like the best idea if you are not going to get a hub.

Yup, I thought so too. When I changed that IP, everything went flawlessly. For now, this will have to do. After all, it works perfectly, even though it may not be the most aesthetic option.
I still have no idea what a subnetmask does however

Doesn't Win2000 come with Internet Connection Sharing, which (if you've got two NICs in your Win2000 box, which you have) does exactly that?

Yes, I believe it does. But bare with me, I don't need this possibility immediately and when I go through with it I'd like to go the professional way about it. Like you told me before.

And thanks for the info Sven. When the time comes that I will add a router, I surely will take a look at that SMC model.