3D is only available for Windows 2000 and later. I tried running the level editor on XP with VMware and it's the same story as on Windows 8.1. Also, while the game runs, it's slow (which is to be expected) and graphics is glitchy; on some levels, terrain doesn't render, Arokh's fire looks like a bunch colored rectangles etc. I haven't tried Windows 2000 yet. It's likely the same.
On Windows 98, you don't get 3D and even to start level editor, you must manually change resolution to whatever you can set in Display properties, because for some reason, whenever VMware scales virtual display, something in Windows breaks and starting level editor gives some DirectX error.
That's why I suggested DOSBox. DOSBox SVN Daum
is the variant that emulates Voodoo, but putting Windows 98 on it could be quite a challenge. There are some different tutorials online on the topic.