The MB sound has no effect on what the VM Guest will use. I know Virtual PC 2007 emualtes and old sound card that might work with Windows 98. From a quick google I see posts that metion VMWare Server ...

I have Win98SE running in VMware Player 6. I enabled the sound options in the VM, set the correct host device, installed the Win98 SoundBlaser PCI driver recommended for VMware, ...