are you sure that all the connections are correct, and have you tried all possible routes to the cd drive. If this fails, try the device manager to identify if the drive has an error, for windows 98 i beleive its control Panel > System > Device Manager
i think i have seen this problem before, where the cd-rom drive is listed, delete it so that that device is no longer present. restart the pc and it should redetect it as new hardware, follow windows setup wizards, this may do the trick