If your using an xp upgrade disk then just boot off the xp cd. When it checks for previous version of windows, put the win 98 disk in the cd drive and tell the xp install to look there. It will verify that you have a previous version of windows and continue on.
No need to install 98 first.
turn the computer on and go into the bios. In one of the menus there is a selection to choose the first, second , and third boot devices.
Set the cdrom to be the first boot device and the hd as the second.
Insert the windows xp disk in the cd-rom. Save the bios settings and reboot. When the it says press any key to boot from cd, or something like that, press any key. This will boot off the cd and load the windows xp install.
Once in the install you can delete any partitions on the drive on make new ones. Note this will wipe out anything that is on the drive.
Make a partition however you like, at least 20 gig. You can make another partition from the rest of the drive later if you want once windows is loaded or just use all 80 gig for the partition.
Install windows on the new partition.
Do not... repeat... DO NOT install Windows 98. For the love of God, man, boot from the XP upgrade CD and install it as if you were installing the full version. It will prompt you to insert the Windows 98 CD as part of the upgrade check.
You do NOT have to have Windows 98 installed first. In fact, it's better if you don't have it installed first.