I've heard this also, and my experience suggest it's untrue.
I've run 98 for years without reinstalling, and have experienced none of the
slowness or proliferation of errors that the "experts" talk about. Removal
of unused programs and files, regular visits to Windows update and a good
registry cleaner are sufficient, at least in my case.
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I've been advised by several 'experts' to reinstall my operating system
at regular intervals.  This procedure is said to be the only practical
way to clear up certain fatal faults which crop up.

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