Okay so you are installing from a hard drive. But where did you get the files from that you are using to install from? Did you rip a CD to your hard drive? If you just copied your old files that were already installed that is where your problem lies. You need some important files taht are on the disk to install. Get your hands on a copy of Windows 98SE. Burn it to CD and then install.
Shouldnt be to hard to find 98SE. It is not supported by M$ anymore and considered abondanware and can be shared across the net legally now.