Ok I sort of resolved this first by disabling protected mode drivers in the Win 98 guest. Unfortunately that meant that the CD ROM also disappeared but rather than set that up in DOS I achieved the same result by disabling the primary IDE channel in System -> Devices. That had the same effect of forcing Windows to using 16 bit mode disk drivers and virtual memory but left the CDROM working on the secondary channel.

That made me think it might have been an IDE controller issue so I tried a fresh install using SCSI disks but had the same problem which leads me to think that it is something to do with virtual memory.

Performance is ok for what I am using it for (retro gaming) so I will leave it like this.

Try using tcg or older versions of qemu and see if that fixes it.

I was having intermittent issues with Windows 98 installation and reboots under Qemu 6.1.0 hanging which I noticed seemed to be correlated with how much else my machine (3rd generation Core i7) was doing. I imagined it might be due to timing issues in the guest so I tried options to Qemu like '-rtc base=localtime,clock=vm -icount shift=7' and they seemed to make things reliable, although I can't remember if that completely unlocks the guest's clock from the host's, which you probably don't want if you're gaming.

I might be wrong but I imagine that you're running Windows 98 on a much faster virtual system than any physical system that was imagined at the time it was originally written, so there's probably a good chance that you're going to hit timing bugs/race conditions in it.

Thanks I think you are correct and I stumbled upon a related patch @ Patch for Windows 95/98/98 SE/Me to run on newest CPUs

Having applied it the VM now works as expected 😀