This is how, first reformat C: then start with your win startup disc choose start with CD rom support then as you know how to find the drive letter to use already type this at your CD drive letter it should look like this with X being your CD drive letter. And your Win98 cd in the comp.
X:\copy Win98 C:
When you have done that just run the setup file in the win98 folder on C:\ you do not then need your CD to setup. Better still is if you have another partition copy the win98 folder there and leave it to restore file's or use for repair after you are up and running