The best way is to FORGET about floppies. If you have the OEM or Full version Win98 CD, first change your BIOS to boot from CD. When it reboots, pick "start computer from CD Rom". Then select "Start computer with CD-ROM support". After it loads it will tell you the drive letter assigned to your CD ROM. At the A:> change to that drive letter. IF it's D:, that means to type in "D:" (without parenthesis). Then type FDISK. When ask if you want large disk support, select "Yes" by default by hitting the enter key. Then pick "View Partitions" If you have one FAT32 (NOT Fat16) partition, your golden.
If not, follow the prompts to remove the partitions ("esc. to continue", etc.). If you have multiple partitions, remove logical drives and then extended partitions, then your primary partion, in that order. Then "Creat Partition". When it ask if you want to make the partion full size and active, select "yes". Restart your computer.
Following the startup proceedure I outlined, select your CD drive (usually D
. Format is not in the root directory, but in the Win98 directory. So type "WIN98" (enter). Then "Format C:" (enter). When C: is formated, click enter. Then type in Setup. Now your rolling. If it stops at the end of Scandisk, click "x" for exit. Follow the setup prompts from there.
Cast not thine pearls before the swine