TRock, it's a mess. I do not know of any way to install WindowsXP on top of Windows98 and have it work. You're mixing a DOS program with NT. IMHO, the only thing you can do is save the data you need on CD or floppy, and reinstall WindowsXP formatting the hard drive, using the NTFS option, And, yes, most of your critical DOS programs will have to be replaced.
Have you checked to make sure your hardware is compatible? All of mine was but some hardware on older computers may not be. MY HP printer is a really old 4L and it works fine once the XP drivers are in place. How much RAM do you have?