Your friend is right to hate XP if all he has is a 40 GB HD. That's barely enough for 98 SE, once he starts using some larger apps and creating larger files, especially video, graphics and sound files.
Here are two easy steps toward different solutions:
1. To re-install Win 98 SE, he has to remove the NTFS partion. Download
DELPART.EXE. It's a genuine Microsoft program that was included in Windows NT 3.1 and buried ever since.
Just copy the program to a bootable floppy, boot up, and run it. It will wipe any partion from a hard drive. You can then start with a Win 98 SE disk, run FDISK, and set the drive up as a FAT16 or FAT32 drive.
Don't forget to back up any files he wants to save. Once you run DELPART, there won't be anything left.
2. Horsepower is imporant to run XP, in both CPU speed and RAM, and it requires a much larger hard drive. If the CPU is under 1 GHz, especially if it's a Celeron, he's right to go back to 98 SE. XP is a dog on slower machines with insufficient RAM.
If his machine is old enough that it came with a 40 GB drive, it probably uses SDRAM. I wouldn't think of running XP with less than 512 MB of RAM. Unfortunately, SDRAM is much more expensive than DDR RAM. If he needs more RAM, he should consider getting a new machine.
To make Win XP a more enjoyable, especially while getting comfortable with it, start by buying a much larger drive. If you live in a city that has a Fry's Electronics, every few weeks, they have great specials on drives. For example, two weeks ago, they had 120 GB Western Digital ATA 100 drives for $19.95 after rebate.
Don't buy too large a drive. The original version of FDISK in Win 98 can only deal with drives up to 64 GB. You'll need
the updated version of FDISK to handle larger drives, and it's still limited to 137 GB.