it could be the hard drive size which is also a problem as 98se maximum was 137gb but the Format and Fdisk Tool in win98 will only work with 64gb, so other tools were produced by hard drive manufacturers to overcome this by imaging
reference formating and disc size problems look here:-
http://www.msfn.org/board/Corrected-FDISK-FORMAT-t85573.html

for many "unofficial at your own risk" but updated tools for win98 and 98se try this it starts about one third down
http://www.mdgx.com/web.htm#9SU