Win98 cd's at least legit ones are generally bootable
so you do not need a floppy

You have two options.

One is to make the ISO image setup CD you created a bootable CD.  This means
you will have to modify the image before creating the CD.  The only way I
could think to do that would be to use the boot CD you created and copy the
_contents_ of the setup CD you created onto it.  You might find a 'Virtual
CD' utility that allows you to create a virtual CD drive on your desktop
hard disk from the ISO image, and then copy the contents to the boot CD, or
you could simply copy the contents of the setup CD to a folder onto the
desktop hard drive, then create a _bootable_ CD and copy the contents of
that folder onto it.  There might be a utility that creates a bootable CD
from a non-bootable ISO image, but I'm not aware of it.

The other option is to set up the laptop hard disk so that you can access
the laptop's CD drive from a boot to hard disk. After partitioning and
formatting the disk (as you have already done, from your description) you
need to install DOS, or at least a rudimentary set of DOS utilities.  You
will need to SYS the hard drive, and that will enable you to boot to it.
Then you can modify CONFIG.SYS and AUTOEXEC.BAT to support the CD drive.
After that, when you boot to the hard drive, you can access the ISO image CD
you created, and run setup from the CD.

You will need DOS drivers for the CD drive to do this.  Laptops often use
special hardware and generic drivers often won't work, so the standard CD
support files that are available may not be good enough.   Look at the
manufacturer's www site and see if they provide DOS drivers for that
machine..  If the manufacturer makes DOS drivers available they should have
instructions for building the CONFIG.SYS and AUTOEXEC.BAT files and copying
in the software that's needed.

There is a description of setting up CD support here:
http://www.computerhope.com/cdromd.htm

I'm not sure from your description, but you may have already got this far -
if so the invalid media messages indicate you do not have the correct
drivers for the CD drive.

Also, have a good look around the BOOT CD sites such as Barts and see if
there's a source for a bootable CD that automatically configures the hard
disk for you.  This is a task that's very common for laptop configurations
such as yours.

My suggestion: Use IsoBuster to extract the contents of the Win98 ISO. All
you need from this ISO is the folder named WIN98. The rest is generally
useless. Make a bootable CD and copy the WIN98 folder to it. Boot to the CD
and then run SETUP.EXE from the WIN98 folder.

But my preferred method is: If you made your original bootable CD from a
WIN98 Startup floppy disk, then you should be able to run the following
command:
SYS C:
Then copy the WIN98 folder to the hard drive, remove the CD, restart and
you'll get a C:\> prompt. Run the following commands:
CD WIN98
SETUP

- have a similar situation. i have formatted and partitioned a laptop , i
have both the external floppy and cd drive units, but while the floppy drive
is hooked up with the bootdisk in it, it can't recognize, or find, a cd
drive on the laptop, so ultimately i can not run the win98 install disk i
have. the lap top does not have the driver installed for the cd drive. what
can i do to get the cd drive working when hooked up.
thanks for any info.