if you can reformat both of your drives, goto bootdisk.com
and download a format utility, or just get a copy of Fdisk. All of this is done from the floppy drive. From there you can delete the primary partitions and then you can format the HDD's without worry. Other wise, you may want to download a copy of Knoppix
(bootable Linux CD) that will allow you to do what ever you want to your dirves. Problem is that it seems that the XP install is using both drives for some reason. Your best option would be to start over with a fresh install on one or the other completly.
On the Boot From A option, all you need it a bootdisk utility that you can get from a ton of sites online. Just do a search on google for win98 Boot disk. Run the .exe on a blank floppy and then boot it up.... Good luck.