Try it again, IsidorA

When you boot with the XP CD,
Delete all partitions,
Create new partitions to what ever you want,
Format using the NTFS file system.

What are the specs of your system? Have you run the Upgrade advisor first?
Many Windows 98 systems are very much on the borderline if not below the
specs Windows XP needs to install.

    Have you verified that all of your PC's hardware components are
capable of supporting WinXP?  This information will be found at the PC's
manufacturer's web site, and on Microsoft's Windows Catalog:
(http://www.microsoft.com/whdc/hcl/default.mspx)

    You should also take a few minutes to ensure that there are
WinXP-specific device drivers available for all of the machine's
components.  There may not be, if the PC was specifically designed for
Win98/Me.  Also bear in mind that PCs designed for, sold and run fine
with Win9x/Me very often do not meet WinXP's much more stringent
hardware quality requirements.  This is particularly true of many models
in Compaq's consumer-class Presario product line or HP's consumer-class
Pavilion product line.  WinXP, like WinNT and Win2K before it, is quite
sensitive to borderline defective or substandard hardware (particularly
motherboards, RAM and hard drives) that will still support Win9x.

HOW TO Prepare to Upgrade Win98 or WinMe
http://support.microsoft.com/default.aspx?scid=kb;en-us;Q316639

Upgrading to Windows XP
http://aumha.org/win5/a/xpupgrad.htm

HOW TO Troubleshoot Windows XP Problems During Installation When You
Upgrade from Windows 98 or Windows Me
http://support.microsoft.com/default.aspx?scid=KB;en-us;q310064