Since you went past the 127GB size, you can read http://www.48bitlba.com to see what can be done.
Frankly I'd just toss 98se in the bin and move on.
Im make a dual boot pc with win 98 and XP. My hard disk is 160 GB, is this a problem when trying to install Win98? Will I need some 3rd party software to partition the disk space? Win98 is not booting up proberly when I install it first. Of course I havent installed XP yet. any ideas would be appreciated