Noy a bug as such, but in conservative hell you still have some liberal (and even elite liberal!) supreme court members...
This is intentional. The game would take a very long time if the government were fully C+, and more importantly, the game would be quickly ended in defeat when the Arch-Conservative Amendment that repeals the Constitution was passed. By leaving several parts of the government in their default state, you experience the worst-case scenario while still having time to change it, and the ability to finish the game in a manageable time frame.
It won't start. It just claims I need a newer version of windows. Was something really changed so win98 isn't an option anymore?
Ever since I started working on LCS, anything I release has been incompatible with Windows 98. I think someone explained why this is to me and how I can change it, but unfortunately I completely forgot what they said. My personal to-the-best-of-my-knowledge explanation would be that Microsoft has a really stupid way of not updating the C libraries in earlier versions of Windows, such that even if your game could otherwise be fully backwards-compatible, if you compile on a later version of Windows, you still need that version of Windows or later to run your game. I code LCS on a Windows XP box, so you probably need XP, Vista, or Windows 7 to run the releases I put out.
On the other hand, if you have Linux, you should be able to get the source code off of the subversion archive and compile it yourself.