I swear I answered a post about this same thing yesterday..
Google is your friend, my friend.
Make sure you have a 4GB or larger thumb drive.
Go to: http://www.bay-wolf.com/usbmemstick.htm
Download the Windows98 files-
Format thumb drive, using HP USB Drive Utility
Copy Windows 98 files and Windows 7 to the thumb drive.
Boot up and direct your computer to the USB..try to get the stick in your "USB_1" slot