I guess from your post, when you boot-up, you get a menu screen asking whether you want to boot into '98 or XP.
There are essentially two things that control this process. First, the C: drive will be active, and is where, when the BIOS hands over control to the operating system, it looks for information on how to boot-up. The two components, are your Master Boot Record (MBR) held on the first sector on your C: drive and a boot.ini file, held in the root of your C: drive. If you take your C: drive away, this information is lost, and therefore, the system can't boot.
I haven't yet read of a full-proof way to overcome the problem you face. Whether if you made the D: drive active, removed C:, and then tried a repair in XP it would work, I have no idea, but any course of action like this, MUST be preceded with a full backup of all your personal files.
It may be with the scenario described, you can use the MBR fixboot command, but again, I haven't tried it, so cannot verify it would work.