If you use the drive makers tool or drive extender, such an issue will occur. To "go native" is the best method.
FDISK was updated, so get that and see if you can make a native FAT32 partition which both XP and 98 can use.
Remember that XP doesn't do over 137GB without SP1. I've run into a few that can't apply SP1 due to their version of XP, so those will just have to get a proper XP.
My computer is based on the VIA KT600 chipset, with an AMD Athlon 1800+ CPU. I have dual boot: Windows 98 SE and Windows XP Pro SP1. I have two disks: 40 GB master and 160 GB slave.
The BIOS recognizes the large drive (and I have verified that by running 48LBAchk.exe). The trouble is with the partition above 137 GB. What I write in Windows 98 I can read only in Windows 98, and what I write in Windows XP I can read only in Windows XP.
Windows 98 can supposedly handle the large disk with no problem, while for Windows XP I have installed a Maxtor program to change the registry to recognize the large disk.
The disk manufacturer and the chipset manufacturer have been as helpful as they can, but I have no solution yet.