Windows 98 is supported under Parallels, just check your Parallels Desktop User Guide for 'Installing Windows 98 as a Guest OS' and follow the instructions there, more specifically, the ones about Installing Parallels Tools.
If you still have no sound, the sound driver is just AC'97, so if you can get that sound driver from somewhere else, like... here, it should work.
Edit: I looked inside Parallels Tools iso file and didn't find the sound drivers there, probably because Windows already comes with those (for AC'97) and it should install automatically.
I think you should uninstall any sound devices from Win98, reboot, and let Windows find the hardware and install them itself. Of course, if you can't find those in Windows itself, use the link I provided.
Last edited: May 31, 2008