Do you have Nikon View installed?
"If you are currently using Nikon View, you will need to use the Windows "Add/Remove Programs" to uninstall Nikon View before installing PictureProject as both applications cannot be installed at the same time." - click here (you may have to scroll down a bit).
If the above is not an issue, go to the Windows update site to check whether your Win98se has all the necessary updates click here.
If the download was a lot smaller than the 36.5Mb I would've downloaded & tried an install on my Win98se PC. I'm on standard dialup : ( G