Win9x uses a memory structure that is a legacy from the old Windows 3.x days, mainly what we term these days as "Free Resources", that you can see in the performance tab under System Properties.
"Free Resources" is the larger of 2 memory stacks, the USER and the GDI. There are 16 USER and GDI stacks, 64KB in size. Once either of these two stacks get used up, Windows 9x is effectively hosed: slows down to a crawl and won't perform properly without a reboot. This is also the reason why there are diminishing returns with how much RAM you actually have. You might have 512MB of RAM, but because of the limited and outdated stack structure, really does not allow you to use it affectively; adding more RAM does not give you more free resources. Adding RAM simply allows more to be loaded in RAM, which is faster than hitting the swapfile on the hard disk.
WinNT/Win2K does not use this USER/GDI stack structure, and simply allocates as much RAM as each thread or process requires. This is why WinNT/2K will eat up as much RAM as you give it, since it is able to use the whole lot. Again, adding RAM will speed things up because memory access do not need to go to the pagefile on the hard disk.
Win9x's swapfile is called win386.swp. Since you have one on drive, you must have specified a fixed size for it. Win2K's swapfile is called pagefile.sys. Microsoft defaults its minimum size to (system RAM x 1.5) and no maximum.
Since I do not work with graphics, I rarely go over 200MB of used RAM (I have 256MB of RAM), I see no need in setting the pagefile so large, so I simply set it at 256MB and leave it. Microsoft recommends at least the size of your RAM in case of memory dumps when you get BSODs.