Looks like you've got most of the problem solved.
I wanted to mention that I have a dedicated PC that boots DOS (version 6.22) from a floppy disk. I got the image for the disk from bootdisk.com, and edited the config.sys and autoexec.bat files slightly. I installed a copy of Win98 on that computer, but I found that the MS-DOS mode that Windows 98 boots into loads some unnecessary drivers (they may have been for the purpose of accessing one FAT32 partition that was on the drive). All my DOS games were on a FAT16 partition, so all I needed was a simple temporary DOS installation with expanded memory support and a few commands (mem.exe, format.com, xcopy.exe, and mscdex.exe).
I had an old laptop computer (newer than the dedicated desktop) which I hoped to use for DOS applications and legacy games, since it took up less space on my desk, but due to a hardware problem with that specific laptop (it could not provide the normal 64 KB of Exp. memory emulation), I had to try something else for programs that required EMM. I tried DosBox, and I got the programs running, but occasionally, my computer would completely crash (OS and all, even in Linux). I got worried about possibly exacerbating minor damage to my computer's video card, since sometimes, when I tried to reboot after the crash, I could not get past the POST. Since it's a laptop, I can't simply go to newegg.com and order a new vid. card for it.
Anyway, I'm sorry for rambling on about the extra complications I ran into. I just wanted to mention bootdisk.com.
Also, the edits that snover and gulikoza mentioned are definitely correct for that version of DOS.
You don't need the bootscan option that avg put in your autoexec.bat file (it's the first line: ...bootup.exe). Your antivirus will load when the Windows GUI loads. Removing the bootscan option from your autoexec.bat file will help to load the GUI a little quicker, but it won't have any effect on memory usage.
You shouldn't be at any risk after removing the bootscan option as long as you aren't trying to connect to the internet in DOS. I'd like to mention, though, that the major security risk you run is using Windows 98. Microsoft isn't far from dropping support for 98, and the newer operating systems are many times more secure. If you might happen to come across a (legitimate) upgrade version of Win2000, it might be worth it to upgrade. However, there are several distros of Linux that offer the same or more functionality and plenty of extra security. Your computer specs are definitely satisfactory for Linux and Win2000, but XP would not be a good idea, in my opinion.
Also, I doubt that your vid card is integrated into the chipset. It is probably a separate card plugged into the motherboard's AGP slot, judging from the other components of your system. Even if it is part of the chipset, it should still be enough for DosBox.