Photoshop Elements 2 still supports Windows 98SE. However, if you buy it in a multi-product bundle, other programs in the package may not.
PSE is a little behind the upgrade curve for PSCS, I wouldn’t be surprised if they decide to eliminate Win98SE support in the next version.
If you don’t need CMYK, or Duotones, or to see separate RGB channels, or a few other features, Elements is a fine product.