As Roger advises, run the chkupgrd.exe util on the W2K CD - first! This generates a report on what is/isn't OK on the system for W2K. Then get the required updates etc. Also does the sytem have basic requiremnts - adequate RAM - and chips that are W2K standard...
Post 21665 #5 (on this W2K forum) details the basics etc. of a dual-boot W2K/'9x. It includes having '98 installed already and adding W2K.
Basically in your situation, in order to avoid a total reconfig/re-install of whole system, you put W2K into a logical-drive in the Extended partition space. W2K will install its boot/start-up files into the present C: (fat32) '98 partition; the actual system files (the OS itself) will go into the logical-drive, and this can be fat16 (2Gig limit) or fat32/ntfs. You can (re)format the logical-drive as ntfs during setup - if you have already prepared it as fat32 prior to installing W2K.
You could use PM6x or later (or System Commander etc.) to create Extended partition/logical-drives if you do not already have them established; i.e. you currently have only a single Primary partition?
Make ERD for W2K once dual-boot established.
Do not erase/delete contents of C: drive; otherwise no boot to W2K, until you do some creative recovery work...
Would be wise to have a common/shared data area too (logical-drive); this can be fat16/fat32. Otherwise if data in an ntfs area then '98 will not be able to access it - without you use add-in utils. This 'data area 'ideally' would be before the W2K ntfs 'logical-drive' - and thus presever continuity of drive letter for both OS. If W2K was fat32 all the way then it could go before or after, and there would be no loss of continuity of drive letter.