The motherboard IDE chipset is VIA, not NVidia, and I did update the VIA drivers to the latest available for Win98.
I have thought about flashing the motherboard BIOS, since there is one newer version before it stopped being updated.
I also tried updating the ASPI driver, since I started to suspect that.
The problem is only with Nero, everything else seems to work OK in UDMA Mode 2, but all Nero programs hang on it, but work OK if I back down to MWDMA Mode 2. Its got to be a problem with Nero, but I can't seem to fix it. I might just have to live with the lower speed until I upgrade to a new computer next year. The slower DMA mode might limit my top speed to 10-12X on a 16X drive. Oh well. And Microsoft is officially dumping support of Windows 98 in July, so this computer is nearly obsolete anyway.