I'd set up a dual-boot environment, WinXP on one partition, Win98 on the other... The advantage is that you can load all the required drivers into the environment without a cross-OS hassle (98 drivers that don't work in XP for example). I used this technique to boot 98 so I could play the original SH and a couple other games that wouldn't run in an XP/98/95 "compatibility mode".
This is one of the better commercial boot managers:
http://www.acronis.com/homecomputing...tibooting.html
In the past, I've used LILO (LInux LOader) to set up a triple OS (XP, 98 and Debian) environment. Cavaet: If you use LILO, be absolutely sure you know what you're doing as it can make your hard drive unbootable!