yes a valid full version of win98 will work. the setup is exactly as you described. you use the winxp upgrade cd and do a FULL installation WITH format. it will want you to insert the win98 cd to verify proof of ownership. it will not install win98, but it might ask you to type in a valid product key. after verification it will ask you to reinsert the winXP upgrade cd and you will continue to do a full installation of XP home with format. it may also prompt you to choose what file system you want to use, NTFS or FAT32 and also the size of the partition you want if you decide to remake your partitions