On win98 os.path.expanuser('~') does not result in a useable directory. The MSDN recommendation for user specific directories is the use of shell.ShGetSpecialFolder, so use it. For details see: http://msdn.microsoft.com/library/default.asp?url=/library/en-us/shellcc/platform/shell/reference/functions/shgetspecialfolderpath.asp

#!/usr/bin/env python
#
# An example CGI script to use hgweb, edit as necessary

import cgitb, os, sys
cgitb.enable()

# sys.path.insert(0, "/path/to/python/lib") # if not a system-wide install
from mercurial import hgweb

h = hgweb.hgweb("/path/to/repo", "repository name")
h.run()