I'd just put a new IDE cable in it, or add another connector onto the existing one if you have the kit.
As to installing W98 over the network, all I can suggest is that you get it working in DOS (like you did with Windows 3.11) using the net command, then mount the CD to a drive and copy the win98 directory across.
As a third option, you could pull the hard disk and plug it into another machine. Format it, sys it, and copy the win98 directory from the CD. Then just plug it back in, boot it, and do: