But if you do install over the top of the previous installation, Windows 98 will want to install to a different directory, probably something like C:\Windows.000 or some such.
So, when you see the box that says Windows will be installed in the c:\Windows.000 folder, just delete the zeroes and the period, so it reads C:\Windows and it will be fine.
Then, you will have to go back to Windows Update and download all the updates all over again.
If you don't change the path from C:\Windows.000 to C:\Windows in the box provided, you will have to reinstall all programs and settings, and you'll have two versions of Windows on the drive. It will be a mess.