I'm running Everquest under XP. There are a couple of querks that I'm not entirely sure have to do with XP (for instance, on the "small" view screen there's an extra mouse cursor), but that's fixed by moving to one of the larger views.

Product activation seems to be a one-time thing, but XP then continues to nag you to try to get you to register for Passport. Passport, and "automatic" system updates, are two of the naggish things that I detest about XP.

As far as reliability goes, I never had much problem with 98 - I can't really give a good comparison between 98, XP, or other versions of Windows. I had a video card problem which kept bringing it down, but actual hardware problems isn't going to be something any operating system would really handle gracefully.