Windows 98 can be really screwy and seems to be prone to a lot of problems. From what you wrote it's really difficult to figure out exactly why you keep getting the windows98 setup. If your worried about losing data (like mp3's, word docs, etc..) there is a great way to easily backup data for free without even having to get into windows. First you need 2 cdrom drives (one has to be able to record CD-R's or DVD's and the other can be the same or one that only reads CD/DVD. If you have over 1GB of RAM you only need 1 drive but since you have windows98 i doubt this is the case. Next you need to get a hold of a Linux Live CD. If you cant get into windows, then get online and downloading you'll need to use another computer or have a friend help with this. Don't freak out at the word Linux, this procedure is pretty simple to do and will not harm your computer at all. So go to http://www.kanotix.org and click into the download section on the left for the version named 2005-04. Or if you like you can download the file you need here(newest version):
http://debian.tu-bs.de/project/kanotix/preview/KANOTIX-2006-01-RC4.iso
The file almost fills an entire CD-R so you'll need to be a little patient if you have a slower internet conneciton. Once downloaded use a cd recording program such as Nero(free demo at http://www.nero.com) to burn the ISO image file. Once the demo is installed click the 'Nero Smartstart' icon on your desktop, click the backup icon at the top of the window that pops up and then choose 'burn image to disc', point the software to where the ISO you downloaded is and hit okay to burn the disc. Once you have your cd put it in your cdrom and reboot. The computer should load from the cdrom instead of trying to load windows (if this dosn't happen go into your PC's BIOS and change the boot order to check for a bootable cdrom before booting from your hard drive) You'll see a screen pop up once the cd loads that says KANOTIX, choose the 2nd option down the list and hit enter. Your computer will now load the Linux operating system directly from your cdrom(this is temporary and causes no change at all to your hard drive or windows installation, once you reboot without the cdrom in everything will be as it was before, so dont worry about accidentally breaking anything!) Once your in the KDE desktop (looks a bit like windows) your ready to start backing up your files to CD or DVD. On your desktop you should see some icons for all your hard drives with names like hdba1, hda1, etc.. double click each one to open a window showing the files on each hard drive. Once you find the one that has all your windows files on it your ready to go. Click the K button on the taskbar which is much like the start button in windows to see all availible software. Your looking for a CD/DVD burning utility called k3b (looks and works very much like Nero) I think it may be in the multimedia folder. Once in k3b you can start adding the files you wish to backup to a new disc project and burn it. Good luck and I hope this helps! Also if you ever find yourself with a broken windows machine and you really need to use your computer to get online, do some work, etc.. this disc works great for this as well. Setting up a dialup modem is a bit more tricky but broadband like cable or DSL should work instantly when you load the disc. You'll also have access to Firefox, IRC, FTP, etc.. If you need more help click the Kanotix chat icon on the linux desktop to get great free tech support from 100's of other linux users. This icon will take you directly where you need to go. If you want to ask more questions before you even start, you can use a windows program like mIRC (www.mirc.com) to get to the same chat room. The server is irc.freenode.com and the channel is #kanotix. I hope I've been of some help, Good luck to you!