Yes, the Navy is still using MS Flight Sim 98 for training purposes.
To bring other people up to speed on what he is referring to. Back about, what 2 years ago, or there abouts, a student went through the program and in his spare time put together a workable T34 in MSFS98, and practiced his events on the MSFS98. He did well in the program, and the Navy went the extra step, and got with MS and put together a better sim package, improved the VFR checkpoints, and the realism of the T34, T44 and T45. The student also got a bonus from the military, ~$7500 I believe for developing the initial idea. At the beginning of Primary training in Corpus you are given a CD with all the necessary files on it to use on your home computer.
I don't know to what extent it is used up at NAS Whiting, when I left there a year ago, it wasn't there yet. But down at NAS Corpus, they have a room with 6 "sim" stations to practice flying on. Four for the T34, and two for the T44/C12. Basically it is a seat, a big monitor, throttle, stick and rudder pedals, landing gear handle, and with a little keypad to the side to change views and other settings. The T44/C12 have a yoke instead of the stick.
There are a number of scenarios already setup on the menu, the pattern, different course rules entry points, some basic instrument drills, and some radio instrument procedures.
There isn't a requirement to use them, and the building is open through most of the evening and on weekends, so people can come in and practice, the only requirement is that you log your time using it, so they can see if it is being used, and to statistically track grades to see if it really does make a difference.
Outside of playing with it a couple of times, I did not use it, I personally found the difference between it and flying the plane to be too great. But I guess its main feature is that it would be great for helping to review procedures and an upcoming event.