most likely the feds will do nothing unless they've had other complaints and your so called neice truly is innocent(as proven by untampered logs).
suggestion 1. make sure she is truly innocent before you contact authorities.
2. get rid of win98, if it still needs to be user freindly get win2k, if not get some version of linux
3. either way get a firewall and some sort of virus scanner proggy, set it to run a check every 6 hrs or something like that.
4. never use aol and if you do use some sort of chat program other than irc dont download things directly from somebody else, upload it to a website if you are insecure and let them dl it from there.
5. cant stress enough that if your neice truly is innocent and you dont no what your doing or arent sure of yourself and the guy is out of state, contact the fbi directly, the local cops cant do shite unless he was actually in whatever state you are.
6. if you can figure out where he came from and not just a proxy, get some friends and show him a good time , a night out on the town, get him nice and drunk but dont waste too much money on it, have a tape recorder, get your confession and then let him 'fall down the stairs' maybe a few times just for good measure but make sure you make it look like some kind of accident and if you are serious and dont want to get caught then dont leave any way to trace it back to yourself, maybe some temporary hair color and some makeup?