Here is microsoft's article on formatting and partitioning a drive:
http://support.microsoft.com/default.aspx?scid=http://support.microsoft.com:80/s
upport/kb/articles/q255/8/67.asp&NoWebContent=1

Make a boot disk for win98 first :
 Use Fat32ebd.exe file located on the W98 CD:  tools/mtsutil/fat32ebd

Note: Before starting make sure toy have your product keys. Once you format,
they cannot be found anymore and they are needed for any installation.

When you install W98 will it become the only OS on that machine?  If so,
then the problem may be that there are W2000 partitions that the W98
installation procedure won't recognize and won't touch.  There may also be a
W2000 boot loader that is interfering with the install. Go here for ZAP or
WIPE which will remove all trace of W2000 and its partitions (and everything
else) so you can start over with a completely clean disk.
http://www.microstorage.com/Harddriveinfo.htm
--
Jeff Richards
MS MVP W95/W98

David

Best way to set up the hard drive is to remove and add
the partition back on to the hard drive.  Use your 98
boot disk, at DOS type FDISK, go in deleting all
partitions, then create a new one, exit fdisk, restart
your computer, type format c: after rebooting.

Email me if you need additional help.

Pete