If I understand you correctly, you only need to install WinXP on your new drive. Once you boot up WinXP, you will see your other drive mounted (probably letter D

which you can copy files from. WinXP can read both NTFS and FAT32 file systems. (Win98 uses FAT32).
After you've copied your data over, you could (from WinXP) simply right-click your old Win98 drive, and "Format..."
- rp