One method is to do a "partial installation" of XP (without really installing another copy of XP). The idea is that during an XP installation, XP Setup will copy certain temporary files to the hard disk, and also create the necessary boot files and put them on to your C drive, in order to reboot from the hard disk.
The new boot files will re-create a dual boot (between Windows XP Setup and Windows 98). After that, edit the boot.ini file manually to remove the XP Setup option, and put XP proper back on the menu.
Here's the way. Boot into 98. Put your XP CD in. Select Install Windows XP. On the next screen, select from the drop down list New Installation (Advanced). Click Next. Follow the prompts for product key and so on. XP Setup will then copy the temporary setup files to your hard disk. When it's done, it should prompt you to restart (and will automatically do so if you don't stop it).
Here you do not want to restart (if you can help it). If there is a "Don't restart" button, click that. If there isn't, let it restart, but get your finger ready on the down arrow button on the keyboard, so that when the OS selection screen appears (like your old dual boot), you can select Windows 98 and not Windows XP Setup.
The time for selection may be quite short. But by the time the selection screen appears, you will have lost 2 or 3 seconds. So get your finger ready on the down arrow to select Windows 98. If for any reason, you miss it, just restart again.
When you're back in 98 (with or without rebooting), go to your C drive in My Computer and find the file boot.ini, immediately under C:. If you can't see it, click View on the top menu bar, Options, and (1) tick "Show All Files" (2) Untick "Hide MS DOS file extensions for file types that are registered". Click OK.
Right click boot.ini and select Properties. Untick the "Read-Only" Box (if it is ticked). Click OK.
Then double click boot.ini. It will open in Notepad. Edit it to read as follows:
multi(0)disk(0)rdisk(0)partition(n)\WINDOWS="Microsoft Windows XP Home Edition" /fastdetect
C:\="Microsoft Windows 98"
Note: for partition(n) above (where it appears twice), n=the number of the partition on your hard disk where XP is installed. So, if XP is installed on the 2nd partition, it should be partition(2). If on the third partition, it should be partition(3), and so on.
Note: the above boot.ini file makes XP your default OS to boot into. You can change that later if you want.
Afer editing boot.ini, click File, Save. Then exit Notepad.
Restart computer and your dual boot should be restored.
Last step is to delete the folder C:\$WIN_NT$.~BT which is the temporary installation folder for XP Setup.