|During the installation critical files were not available, you may not be able to get there from here.|
Installing Windows from the hard drive would have avoided this problem in the first place. Perhaps you need to do it all over again and this time first copy the files from the Win98 folder onto the hard drive and run setup from there since you already know you have real issues with your CDROM drive delivering defective data at installation time.
Since 98 was shipped with Bus Mastering shut off, it might also be a DMA issue with your hard drive?
Enabling IDE DMA on Windows-based Systems
DMA turn on fix
Another area to look at would be how much memory you have, if it's over 512 meg you need to scribble some in your system ini file.
Other issues would be the size of your 98 partition. Above 137 gig seems to cause troubles. And the stock fdisk.exe messes up at 64 gig, there was a replacement fdisk issued.
I don't have a fix for you other than to help you see where it went wrong the first time and do it again. Patching bad installations are always best fixed by a good clean installation.