My 2 cents
 
Buy a refurbished server from evertek.   www.evertek.com    Sometimes they have have HP rack servers for cheap.  (like an HP DL380 350 bucks)  fill it up with drives and set it up as a raid 5 with a hot spare.
 
Put server 2008r2 on there with pervasive 11 64 bit.  We have NT and win 7 clients. I think you will have to forgo the 98 machines.  You can get cheap workstations at evertek too. I recommend the HP workstations. Fast, powerful and low cost. You can get them with win 7 for about the cost of win 7 alone.
 
Get pervasive 11 and update your dba convert a few evo seats for a taste of the future.
 
users can run classic if they have to and a few power users will love evo.
 
get mozy pro for backups so you never have to think about tape backup again.

Thanks a lot for the hardware/software advice and the links..  This will be very usefull...  
 
The change to win2008R2 and Pervasive 11 seems stright forware..  I am a little confused about the updating of our old DBA to a current DBA classic and EVO.  If we update the DBA program files and data will we have to stop using the DBA 2000.1 we are currently running??  Is that true or can we still use 2000.1 (if we want to) and current DBA Classis, EVO with the same new server and data files??

Lynn..  All this looks good, I'm sure we are working in a cave man way using DBA 2000.1, but my users so far have seen nothing in new updates to make them feel things will be much better (I have not shown them the links you just sent, it was reviewed a year or two ago.)  
 
From my prospective as the companies CEO, I note that we have problems creating invoices to customers.  Our orders are large and maybe complex, invoice timing and amounts (pre payments and progress payments) can be hard to predict at order entry (the engineer doing order entry is more concerned about what is ordered and how we are going to make the order, than how we are going to get paid for it).  Many times the order changes before it is finished and the invoice amounts and invoice schedules can change.  To me, I would like something that can make invoices on a SO for any amount and simply have notes to describe the new invoice line items and be able to show the total amount of the order and how much has already been paid from the customer it we want to show these items (different customers want invoices to be different forms).  To me invoicing should be separate from sales order entry if necessary??  Do I make since??  Now we have to make manual invoices to show the customers what we need to to get paid the correct payments.  Then if causes accounting problems since they are not in DBA...  I'm sure I am leaving things out.
 
Warranty & Field Service is another area we have not been able to use DBA for at all.  We had an in-house database system for a while but that has been scrapped for years now; service just does it by hand, Excel, or word files.  We would like to track all items shipped to customers by a serial numbers (some are our serial numbers and some are our suppliers numbers).  This includes sub level parts having different serial numbers than the top item.  The sub level part serial numbers can change as items are repaired, replaced or updated...  We would like to issue RMA's for sub level parts by serial number (of course the part number and maybe dates, rev levels also??).  Then when we send out a new or repaired sub lever part we would like to track the warranty for this replaced sub part...  Again..  Do I make sense..  I am not the service department.
 
Also tracking top-level systems as locations of owners, factories, responsible personnel, address, phone numbers, e-mail addresses...  all change, we have no database to track all this…  
 
Also Job Costing is always a problem…
 
Does the new EVO help in these areas??