This issue can be resolved by placing an extra comma "," after the disable code and in front of the number to be dialed. This gives the modem enough time to disable call waiting before dialing the number.
To disable the Call Waiting feature and add an extra comma, perform the following steps:

Windows 98/Me

1. Double-click My Computer .
2. Double-click Control Panel .
3. Double-click Modems.
4. Click Dialing Properties.
5. Click to select the "To disable call waiting" dial check box.
6. In the To disable call waiting dial box, click the appropriate code to disable the Call Waiting feature, for example: *70, 70#,
   or 1170.
   NOTE: The geographical area where you live determines what this code is. Call your local telephone carrier to obtain it. Click inside the box where you select the code. At the end of the string add an extra comma. This will allow the pause for the modem to dial.
7. Select whether you want to dial using tone dialing or pulse dialing. Then click OK to save your settings.
   

Windows XP

1. Double-click My Computer.
2. Double-click Control Panel.
3. Double-click Phone and Modems.
4. Click the Dialing Rules tab.
5. Click the dot next to the appropriate Location.
6. Click the Edit button.
7. Click to select the "To disable call waiting" dial check box.
8. In the "To disable call waiting" dial box, click the appropriate code to disable the Call Waiting feature, for example: *70, 70#,or1170.
   NOTE: The geographical area where you live determines what this code is. Call your local telephone carrier to obtain it. Click inside the box where you select the code. At the end of the string add an extra comma. This will allow the pause for the modem to dial.