well i'm pretty sure an OS can't fit on a floppy disk :P
I think what you mean is copy the OS from the CD-ROM onto your hard drive so you don't have to insert the CD-ROM everytime you install a new device. If that is what you want to do:
1) Put the CD-ROM in your CD-ROM drive
2) Right click My Computer and click "Explore"
3) Expand your CD-ROM drive and locate the "Win98" folder
4) Right click the "WIN98" folder and click "COPY"
5) Expand your C: drive
6) Right click an empty space in the window and click "Paste"
Whenever most people do this, they rename the folder to "CABS", you can do this, but its not necessary. Next time you are prompted for the Windows 98 CD-ROM point the location to C:\Win98