You don't emulate Win98SE. You emulate a computer that runs it, and Win98SE can run on low-end Pentiums (give enough ram like 32MB) so that's a broad question. There's a lot of range and trial and error involved as PCs aren't just one thing only.

For today's common CPUs, I'd suggest hovering around 233MHz for any of the S7/Slot1s (Pentium MMX 233, K6 233, K6-2 233, Pentium II 233, M II 300 (actually 233mhz)) and see which suits your compatibility needs, then move down a notch if you can't 100% that or step that up otherwise.

Can anyone tell me what the absolute best hardware config in terms of performance is for emulating Windows 98SE??

The fastest performing host processor you can find is the best but is likely not what you want since it's too expensive so you won't want the best unless you don't care about wasting money.

Do you mean best as fastest or something efficient that runs 100% on average CPUs? Or fastest machine that you can setup using PCEM?

I have a low end CPU (Pentium G6400) and due to it being a 4ghz CPU, it can emulate an ok machine without any hiccups:
-Pentium 166mmx
-64mb RAM
-Virge S3 Card
-Sound Blaster 16
-Voodoo or even Voodoo2 accelerator card (4mb)
-CD-ROM Drive
-Floppy Drive

Personally I go with Windows 95 because for some reason 98 has some ugly performance drops when the CPU is idle. Windows 95 does have it, but far less noticeable. Note that this only affects when you are not running anything (i.e. browsing through folders), once a program is running it stays at 100%.
Another tip is to never map your physical CD-ROM drive to PCEM's emulated CD-ROM drive due to performance being really bad (games with CD audio tracks will skip a lot), so create image files of your CDs and load those instead.
I prefer emulating the Voodoo1 because it seems more according to the rest of the system, but Voodoo 2 also works full speed.

I think it's more productive to think about it a bit differently. Unless you have the latest, fastest, and most expensive host CPU, you'll most likely run into performance problems sooner or later. But if you're only going to play say adventure and RPG games (like myself), you can get away with a less powerful host CPU. For 3D games the requirements are a lot higher to get smooth framerates and stutter-free sound.

As a general advice, try to emulate the *lowest* system that runs your game well enough. E.g. you might get better overall performance when emulating an MMX 166 versus a 233, like the previous poster said.

Related info: in my tests 86box was a lot slower when emulating the exact same hardware (in the 20-30% range), plus the mouse pointer movement was really jerky (laggy, stuttery) and even buggy in some games, so if you're into games that feature a mouse pointer, and especially if you have a lower-end host CPU, PCem is definitely still the way to go.

In the past, I ran Windows 98SE on real 486 PCs and early Pentiums. Pentium 75 to Pentium 133.

Pentium 166 MMX was the lowest PC I ran Windows XP SP0/SP1 on (official minimum requirement).

Windows 98SE fits somewhere in-between those two extremes, I think.

Windows 98SE, in its role as an "OS", itself may or may not make use of FPU/MMX that much.

So if you have a weak host CPU, starting with a slow Pentium or fast 486 might be worth considering.

Also make sure the emulated VGA card has 2D GUI acceleration and
that enough RAM is available to the emulated PC (24MB, 64MB, 96MB, 128MB etc).
So there's no need for Windows 98SE to perform excessive swapping.

Using an SCSI controller would be cool, too, but I'm not sure if PCem/86Box has one.

Back in the days, I've often used PCs with a humble CPU, but combined with lots of RAM and a quick HDD, whenever possible.

If no SCSI is available, you can still try enabling DMA in device manager - and cross your fingers and bet that Windows 98SE will boot up again next time. 😉

Edit: The slowed Windows 98SE experience I ever had was with a 486DX2-66 based Compaq PC.
So I would recommend to try to emulate something quicker..

Thread cleanup

In case a reminder is needed the question posted by the OP is:
"Hey, I just downloaded PCem, and I'm getting to know the configuration options and some of these things are before my time. Can anyone tell me what the absolute best hardware config in terms of performance is for emulating Windows 98SE??"

It's also not outside the realm of possibility that the pcem forum may have more numerous and knowledgeable users of pcem than this forum, so such questions should be asked there as well.