You will need Windows XP and above to even use many normal DVD burning programs that support the advanced label-scribing features of these newer drives, and possibly some other features of the drives. I would imagine a machine capable of running Windows 98 just would not be happy with trying to burn discs are extremely high speeds with little hassel.
Speaking of disc authoring programs, there aren't many that support the features, so you may be stuck with what the drive comes with unless you buy a new burning 'suite' (as they are called these days :doh:). But what comes with the drive is usually pretty acceptable, at the least.
Now, special discs are indeed required; LabelFlash and LightScribe discs have a special top side dye that the drive can use as its medium to produce the label. LightScribe discs aren't supported by LabelFlash, and LabelFlash discs aren't supported by LightScribe. Personally, I think these techniques, while they take some time, are a bit nicer than making labels or just using a permanent marker to label discs, but I have rarely actually done it due to the time required for a decent label to be written.
And some CD players just do not like burned CDs. Sometimes you can find a perfect media & burner combination to suit the playback hardware you have, though. Even then, it may be hit or miss, unfortunately.