DHCP Issue

[Steve Walters]

I have an issue that I am very baffled by. A 98,dhcp client was operating on the network. A message appeared saying there was a machine with a duplicate IP address. When I looked at his IP settings via winipcfg he had 255.0.0.0 as the subnet. Our DHCP server is setup to 255.255.0.0. His ip address was 172.16.3.2. In DHCP Manager this ip address shows up assigned to bad ip. I looked at another random machine and it also had 255.0.0.0 as the subnet. The ip was 172.16.2.110. My scope in dhcp is setup as 172.16.2.0 through 172.16.3.254. Unfortunately, I inherited our current setup and I am not versed enough with DHCP to answer some questions I have. One more thing...possibly related, possibly not...on the network I can bring up a machine with duplicate machine names. I get a warning but I can click okay and have both machines operating at the same time.

Does anyone know what would cause this?
When DHCP assigns an IP address does it assign it to NETBIOS name or at the MAC layer?
Is the machine name issue a setting somewhere or is something not right?