I'm running win98SE and I've got no problems either.
What does your Daphnelog.txt say the problem is??
I'm not sure what you have or haven't done, so here's a run-through.
1. you already said you uncompressed the mpegs
2. Do you have frame-files for each game? If not, you need them.
3. Does the directory in your framefile point to the location of you mpeg?
4. For each individual game in the Daphne Loader, you said you selected vldp. Did you browse and put in the path to your framefile on that same page?
5. Did you unzip the roms into the originol folders, and did you get the right rom for each game? (but that would tell you there is a rom problem)
6. If the screen goes black for a minute, or even two, let it continue. Some of the laserdisc games take a moment to load.
BTW, I would have been nice to you a the Daphne board, but I don't even look there anymore unless I'm trying to fix a problem. Some of them do have a disproportionate god complex and seem to think that this silly hobby places them in some lofty madona-like pedistal. Those individuals need to be slapped (no names), but others are really cool and will help you out. Their biggest gripe is if people immediately post a question before searching to see if it's already been asked and answered.
hope this helps -Dr. J