First of all, I esperienced that both patchs crashes, and the hosts file on WinXP PRO SP1 does not work (after installing the win 98 hosts file, i moved it from c:\windows to\ system32\drivers\etc but doesn't work).
SOLUTION:
Use hosts file and new patch together. It will not crash anymore.
1) Install the hosts file for win 98/me.
2) Go to c:\WINDOWS and move the hosts file to c:\windows\system32\drivers\etc
3) Install the new patch in Winmx folder
4) ipconfig /flushdns and restart
5) Start Winmx.
When you start winmx the patch ask you if you want to remove the hosts file, answer NO.