The iPod is a great MP3 player, I love mine, and wouldn't trade it for anything.
I run my iPod on a Mac, and my first suggestion is always to just buy a Mac. It's always worth it.
Next to answer your questions. The iPod won't work with USB 1.0. The original USB simply isn't fast enough. And about the OS concerns. I'd say you don't want to stray from the reconmened systems. Windows is not a user friendly enviroment, and things don't run smoothly through out their many operating systems.
So, to wrap things up. USB 1.0. no good. Windows 98, very risky.
If you need more questions answered, Apple is a great source. (
www.apple.com)
Buy a Mac!