I've setup several Win9x / XP dual boot systems & I've NEVER booted off the XP disc to do it.
To prepare, you'll need a minimum of two partitions on the same HDD or two separate HDDs. And if you want the Win98 installation to be able to see the WinXP installation, the XP partition will have to be formatted as FAT32.
Assuming you have the 2nd partition (or HDD) formated & ready to go, all you need to do is boot into Win98, then pop in the WinXP CD. Wait for it to spin up & you'll get a popup asking if you want to "upgrade (recommended)" but what you need to do instead is to select "advanced"...then just direct XP to install to the 2nd partition (or HDD). The rest will continue on as a normal installation. On the reboot, you'l have a boot menu from which you can choose which OS you want. XP will be the default.
BUT!!!! - first back up (as in copy off) all data to external media (CD/DVD); and verify those copies are accessible etc. on both the parent system and preferably at least one other...
Then essentially follow "jam's" outline... It will work - but pay attention the ntfs issue for '98; if anything in the XP partition needs to be accessed via '98 then that partition must be fat32... (unless you involve an add-in util for '98 to read etc. ntfs areas).
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