It is possible. It would be easier if your copy of Windows 98 says
"Upgrade"; If it is an OEM (full installation on a new computer), it is
better, if you can afford it, to install on a new hard drive, and connect
the old one as secondary afterwards, in order to use the files.
Watch for further explanations in this discussion thread.
> is it possible to upgrade Windows 95 to Windows 98?