That part is true, but it only affected some computers (anecdotally, about half). It appears to be at root a bug in the timer chip on the motherboard, which in turn tickled a bug in Win9x.
Nope, it was a purely software issue - a 32 bit counter, incremented 100 times a second. When it overflowed, windows crashed.
And a lot of the stability problem wasn't Win9x at all (at least once we got past the initial version of Win95) but rather was due to shit hardware and buggy drivers, or sometimes just plain poor design, like the 3-slot memory thing.
Doesn't explain why a Windows box that crashed multiple times per day would run stably for weeks to years once Linux was installed on it. Nope, it was the fault of the operating system, no doubt about it.