Honestly, I wouldn't waste my time with Physx, it makes no difference unless you play incredible amounts of Mafia II (ironically I do) or other titles; there are really not that many titles today that support it. It would be more of a waste of power than anything.
If you are dead set on using it as a Physx card, then yes, all you would do is set the Physx processor to the 9800GT.
As a side note, 8800GT/9800GT Nvidia cards make great gifts for those who are starting out on gaming and have nothing to go off of. Its still a good card today.