Windows 98 was quite a step up in polish and performance from Windows 95, even on the same hardware. Windows 2000 was an even bigger step up in polish, but more resource hungry.

Exactly, Windows 98. Windows 95 was like the beta version, where all the functionality was there but did not work most of the time.

Remember that was the era of single processor PCs, if you had a really demanding CPU hog you generally had to forget about trying to multitask as the experience would be painful. If you had something like file compression happening (which could also occupy the HDD) it'd leave little for the UI redrawing, and this is also long before that aspect was accelerated

right, but you can also bring a modern system to its knees with a high enough load. the new systems suck by default. keyboard response time is much higher than ever because of the accumulation of abstraction strata.