The Wireless link on my Windows XP service 2 laptop kept complaining and telling me the data is invalid when I tried to transfer a file via infrared to a Windows 98 device. I even upgraded the smc infrared drivers I was using on the XP computer , but alas didn’t work.
In the past I have used Windows 98SE to transfer to Windows 98 without any problems. Turns out this isn't possible via Windows XP service pack 2 to a Windows 98 SE device via infrared.
See: http://support.microsoft.com/kb/906487
The next easy answer was to use a mobile phone. I simply turned on infrared access on the mobile phone, transferred the drivers to the mobile phone and then transferred from the mobile phone to the windows 98 SE device. Problem solved.
If you are using Windows 2000, ME, 98 or even XP (without SP2) and get the message regarding the data is invalid try adjusting the transfer settings to 9600 bps and see if that works. I’ve read that can solve the problem for non-XP sp2 users.
There are also some SMC Infrared Port drivers available (use at your own risk):
http://www.laptopvideo2go.com/forum/index.php?showtopic=7279
They upgraded my SMC driver from a 2001 driver to a 2006 driver and worked fine for the connection to the mobile phone.
Again like always I hope this information helped someone and saved you a bit of time.