Try this method of installing:
Set your BIOS to boot from floppy then insert a Windows 98 startup diskette into your computer’s floppy diskette drive, and restart your computer. During the startup process, select the option to start the computer with CD-ROM support. Switch your active drive from A:/ to the drive letter that identifies your CD drive (usually D:/) and press ENTER. Insert the Windows 98 SE CD into your CD drive; at the DOS prompt, type cd Win98. Press ENTER, type setup, and press ENTER again. This will launch the installation.