albeit with lots of weird problems
Since you seem to be able to boot from a floppy go here and load their mem test to a floppy and boot it.
Run it for 8 hours,,no errors allowed.
Next the only devices needed for what your trying to do are a floppy unit, cd reader unit, one HD.
Unplug everything else.
I need to clean the hard drive and reinstall Windows on my dad's computer so I used fdisk to delete and recreate the primary DOS partition, which I routinely do on an older machine, then reformatted HD.
I booted from a startup floppy and started Setup which ran Scandisk normally finding no errors and proceeded to the "Welcome to Windows 98 Setup" screen. So far so good.
However, when I got to the "Setup is preparing the Windows 98 Setup Wizard which will guide you through the rest of the setup processs" screen, I get a beep, a small black rectangle (maybe it's supposed to have some error message?) on the screen and I'm frozen. I tried a couple times and the same results.
I looked through the Microsoft Knowledge Base for an article that addresses this, but found nothing. This machine formerly had Win 98 running on it, albeit with lots of weird problems which is why I'm giving it a lobotomy. The only change I made was to install an internal Zip drive. I didn't change any BIOS settings.
I don't think it's a device conflict because Setup doesn't get that far. I only get to the Setup Wizard before I totally freeze up.