both dos and windows need to be on the c: drive. perhaps the simplest way to do this would be setup the dos/98 drive as the master drive, and your first boot drive. Then install XOSL onto that drive, and setup from there.
You could also do a more involved approach. I believe you would still need to setup the dos/98 disk as the first boot drive and you would need the windows xp install cd, then you would do a fixmbr, a fixboot, and a bootcfg from the recovery console command line and fill in the options. You also might need to edit a file to get 98/dos to work together well. Basically what you're doing is reinstalling the ntloader onto the new drive, setting up the boot.ini to boot to either xp or 98, and then if you selected 98 you would be given another boot screen where you could choose safe mode and all that stuff along with dos 6.22. as you can see, a much more involved process.