boot from the cd and it will help you with the rest!
go into your system's bios (reboot and hit del for F1 or whatever) and go to the boot order section and cd cd-rom to first
if your bios doesnt support booting off the cd..
(get a new motherboard!) or you can make a win98 boot flopy, boot from it with cd support, go to the cd drive and run the setup
edit.. something like:
Windows 98
A:> e: (whatever your cd drive is, win98 makes a virtual mem drive after C: called D:, then the cd rom drive next
E> setup (not sure if that works on the xp cd but it does for all previous ms os's.. i always just boot from the xp cd though)