Did you check the Microsoft site prior to upgrading to see if there were updated drivers for your modem?  One problem with jumping between operating systems is keeping up with the drivers for it all.  I would suggest seeing if you can track down some new drivers for your modem, and saving a copy to your desktop before trying XP again (just in case).
    And as for downgrading to 98, again, keep in mind that drivers will most likely change for the modem.  Check the manufacturer site, and see if they have downloadable copies there... if not, check out http://www.driverguide.com.  They normally have a copy of just about anything you can think of.
    And as for the CD creator software... just a little side-note (totally unrelated to the actual problem).  Check out a program called Nero.  It's compatible with almost every CDR/CDRW, and has versions for all Windows releases.  I find that it's much easier to work with, and burns a lot more dependably than the actual programs that came with my CDRW.
    Let me know if you need a hand with anything, and I can add you to my IM and help talk you through some stuff.