Does anyone know how to set up the Windows98 Personal Web Server so that it will parse PHP code in documents that have a ".htm" extension? I know how to do that in Linux, but can't find anything about how to do that with the PWS in Windows.

Unfortunately I don't know; but if you've come to a dead end you can try a PHP/Apache/Webmin package for Win98 available at http://www.firepages.com.au - installs in a snap and works great from what I hear.