I think something else is wrong here Bud! Windows is reaching a place where it is failing because either one of your plug and play deivces, mobo on-baord devices or peripheral devices is dead or dying. Pull your hard drvie. Find a friend who is willing to let you install your drive temporarily and attempt to install 98 on their puter. If the install is good you will need to isolate which of your puters components has "taken a dump".
Noli Nothis Permittere Te Terere!!
EVGA 680i, Dual EVGA 8800GT'S (650/950), 4 gigs OCZ DDR2 1066, Intel Q9450 at 3.8 Ghz, Koolance Water Cooled, Dual Plextor16x DL DVD+/-RW. Dual WD 250gb 16mb Cache Sata 3.0. 3DMark06 score = 19,168.