(If you are using a harddisk bigger than 64GB see:
Fdisk Does Not Recognize Full Size of Hard Disks Larger than 64 GB
http://support.microsoft.com/default.aspx?scid=kb;en-us;Q263044 to check
you have the current version of FDISK for Windows 98SE)

You have to enable support for large disks when asked to access the disk
in FDISK.

You could post the result of command FDISK /STATUS here to receive more
advise.

FORMAT applies to partitions.  You problem is that the partition is not
using the whole disk, so you need to change the partitioning. FDISK is the
Windows/DOS partitioning tool, but it cannot change the size of an existing
partition. You can delete everything and start over with FDISK, or you can
use FDISK to create a new partition in the unused area of the disk. This
partition will then get a new drive letter (eg, D) and you can format it and
use it.  There are third party utilities such as Partition Magic or Bootit
NG which can change the size of an existing partition without affecting
existing data.

You may need to consider why the existing disk is only partly used - for
instance, your BIOS might not support using all of the disk.