Mike,
I'm running IE 6 on both Win 98 SE and XP Pro and have no problem accessing chat. Not that I do, of course!
Internet tools, advanced, MS VM - I have JIT compiler for VM enabled.
My 98 PC also has the Sun JVM installed - still works.
Also, under Internet tools, Security, Internet sites - my Java settings are at medium.
Have you any firewall - hardware or software - that could be getting in the way? Is this home or corporate connection?
HTH
SD