With what file formats are you testing with?
Gapless play in Winamp:
out_ds config -> Buffering tab
Increase "buffer ahead on track change" slider value to taste
(eg. anywhere between eg. 200ms to 1500ms)
For files recorded with silence at beginning or end, or for mp3 (which is not gapless by default due to a flaw in the mp3 technology)
out_ds config -> Other tab
Checkmark "remove silence"
Adjust "cut off" value to taste
Default = -40dB
Adjusting "cut off" to -100dB (moving slider to the right) will cut off less.
Adjusting it to -30dB (moving slider to the left) will cut off more.
The lowest value of -15dB will cut off much more than any 2 seconds.
Usually somewhere between 3 to 10 seconds are lost.
-15dB is not really a recommended value, and I wouldn't really go much lower than -30 / -25 ish.
Cut Off @ -40dB with Buffer Ahead @ ~1000ms produces perfect gapless play for me, with all formats. Buffer Ahead slider can be lower, but a higher value works better for Audio CD's (gapless mix cd's).
Note: There's a bug in the Sonic Engine with Winamp 5.0 Beta 2
where gapless Audio CD playback doesn't work when "Enable DAE" with "Use Sonic Engine" is checkmarked (in_cdda config).
The workaround is to checkmark "Enable DAE" and uncheck "Use Sonic Engine".
This makes Winamp fall back to ASPI first (all OS) or, if no ASPI layer found, then SPTI (Win2k/XP).
I know that you're using Win98
and the ASPI Layer is installed by default on this OS.
This bug is fixed in Beta 3