Isn't there a small TSR that disables the ATX OFF command so you can drop to DOS by performing a shutdown? If that works, it shouldn't be hard to make a TSR to fix it.

This problem frequently occurs and even according to Microsoft support, it has too many possible reasons.

https://support.microsoft.com/en-us/kb/238096

Copied from a post I just made for a user that is experiencing a similar problem: (second time in a week) 🤣

I know it's annoying but I also know it's not deadly. When you stuck with "Windows shutting down...blah..." window, just wait for a couple of minutes and shut down your computer. Nothing bad will happen. I had many rigs that do that to me, and even during the days, when you make one last update or install that one last utility, this was happening, sooner or later. The matter was not if, but when. We used 98 machines like this forever during the times without anything bad happening.

It is a very well known issue, some of my systems do this, some don't. It never happens with a clean installation but often after installing drivers. I don't care, otherwise it runs fine.

I figured it wasn't a real issue, but just wanted to make sure. Thanks for the answers!

Bumping this thread just in case anyone is interested. I found that the shutdown issue doesn't appear on other Windows versions. Windows 95 OSR2.5, Windows ME and Windows 2000 shutdown properly. This is somewhat puzzling to me, that Windows 98 SE would have such an issue. Could it be related to APM or ACPI?

Have you installed ACPI support? One of my machines had shutdown issues with Windows 98 (froze at the Shutting Down Windows screen as soon as I installed the latest official Voodoo drivers), and installing ACPI support like described here seems to have solved everything.

I'm pretty sure I tried this once, but it was after applying mainboard + 3dfx drivers, as well as the Unofficial Service Pack 2.1a. I'll give it another go with a clean install and see what happens.

UPDATE:

Turns out Windows 98SE installed ACPI by default on the board, so I did a clean install with APM instead (you just have to type "setup /p i) and now the system shuts down properly (displays "It is now safe to turn off your computer"). I'm guessing Win95 uses APM and WinME uses an updated ACPI? It would seem weird for ME to install APM by default, if 98SE installs ACPI, unless they figured out the bug later on and had no solution other than to install APM instead.