You could use a virtual machine to install windows 98 and use it from windows xp.
If this solution is not good for you try to copy all the files of the windows 98 installation in the partition you have tried to install windows 98. If you are lucky enough it might boot (with a lot of warnings and errors you will have to fix later).
The laptop have a serial ATA hard disk? If so check this:
http://www.experts-exchange.com/OS/Microsoft_Operating_Systems/Windows/98/Q_21299173.html