There is some supplementary technical information specific to Furby Babies at the bottom of the page. And so . . . Doesn't seem to matter though. Run it in Dos Mode if you have problems. Plonk the Furby within maybe 50cm of the irda port and do what it says on the screen.
Usual disclaimers apply.
Suggest you give your PC a good reset before switching back to life-critical applications, just in case. Note that on my laptop, the irda port can be set at bios screen for 1.0 or 1.1 mode. This does not make any difference to the software, either in dos mode or under Win98. As a precaution, when in Win98, I keep the irda port enabled but switch off the automatic hunting for other devices, in case the periodic pulsing upsets Furby. Even with IR disabled at the taskbar, the program still works the port, because the hardware is still there, only the higher level protocol stuff that Win98 likes is disabled.