I wonder if your floppy drive is bad? I had one die b only reading it's own damaged disks.
In my latest attempt to put Win2k, Wi 98, and Linux onmy PC(whcih I think was cause by bad RAM) whenI got to the 98 section I would get very strange error when I tried to put it on a 2GB partition, with the rest of the HDD lefet blank. IMOHO, it sounds like your HDD is the cause of troubles.
Main: Gigabyte GA-770T USB3 - Phenom II 840 - 4GB DDR3 - Radeon 5750 1GB
HTPC: MSI K9N6PGM2-V2 - Athlon II 250 - 4GB DDR2 - Radeon 5670 512MB
HTPC: Zotac GeForce 6100E-E - Athlon X2 5800+ - 4GB DDR2
"Play a Windows CD backwards and you'll hear satanic voices, thats nothing, play it forwards and it installs Windows."