Well…. It’s beta.. what more can you expect? 
I don’t think that Win95 is the cause, it’s just contributing to the problem – lots of beta problems have been flying around for a lot of people.
FYI, the Fighter Emoticons work in more then just the Yahoo Fighter’s IMViroment. They also work in some other IMViroments… just never in an IMVIroment-less screen. 
Windaphoner