This is due to the interaction of the virtual communications device (Vxcomm.vxd) and the Windows Driver Module (WDM) modem port driver (Ccport.sys). This is a Windows 98 Second Edition problem and a supported fix is available from Microsoft, but has not been fully tested as of yet and should only be applied to systems having this specific problem. You should contact Microsoft for the fix: http://www.microsoft.com/support/supportnet/overview/overview.asp.
My system tends to stop responding (or hang) or experience slow download times when transferring a large file. I have Windows 98 Second Edition and Zoom Modem USB, Model 2985.
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