My second/old pc is a Win98SE machine.
I just installed Winamp 5.2 on it and it works like a charm.
No problems playing Audio CDs whatsover (ref
However, I did uncheck the following in the installer options
Shoutcast Wire | Online Media | Predixis MusicMagic | Portable Media Player support
(ie. I only kept Media Library checkmarked.)
Audio File Support:
Sonic Ripping/Burning Support
This was mainly because 1) there's no internet connection available on that machine, 2) I won't be connecting any Portable Media Players to that pc, and 3) I'm not sure how compatible with Win98SE the Sonic Burning/Ripping Engine is.
I kept everything else checkmarked, and everything works perfectly ok.
No crashes, no error messages, and it's superfast when using any classic skin
(admittedly a bit slower with a Modern skin, but it's only a 450MHz p3)
So, maybe your CD playback problems are related to the Sonic Engine?
Winamp > Prefs > Plugins > Input > CD plugin (in_cdda.dll) > config:
Uncheck "use sonic engine"
Winamp > Prefs > CD Ripping > Ripping tab:
Uncheck "read audio data from CDs using bundled sonic engine"
You can even totally disable the Sonic Engine by renaming PXSDKPLS.dll (Winamp root dir) to eg. PXSDKPLS.dll.off - or you can uninstall and reinstall without Sonic Engine (ie. uncheck it in the installer options).
Winamp will then use the native Win9x ASPI engine (Windows\System\wnaspi32.dll) for Digital Audio Extraction method when playing Audio CDs.... which it did perfectly on my old Win98SE machine.