Are you trying to install Windows XP as your primary OS or are you trying to dual-boot between XP and 98?
If you're trying to dual-boot, which OS did you install first? If it's 98, then you're in trouble...big big trouble... J/K - no trouble - it's just that you always install the older OS first.
If you're trying to install XP as your primary OS on partition C:, put the CD into your CD-rom drive, make the drive bootable in the BIOS and you're all set. When you boot your computer, press a key when prompted to boot from CD-Rom, and then you format your C: partition within the XP installation, and you're good to go.