Groundgripper,
I would first test the connection, as Voidhawk mentioned, by plugging the Notebook into the connection that you use on your Desktop. Just pull the phone cable out of the back of the Desktop's modem and plug it into the Notebook.
If you still have the same problem as downstairs, then I would look at a fresh install of Win98SE. (If it has been several months since a fresh install was done.)
Take Care,
Richard