Hmm, are there updated versions of the sotware/patches anywhere?
You won't be able to format the drive while Windows is running since you are running from it. (Make sure also you have everything backed that you want, because formatting will delete everything, leaving the computer therietically blank (only retrievable with special software, so make sure you do back up before this))
Put a floppy disc into the floppy drive, go to my computer and right click the A: drive (the floppy drive) and go to format. Format the disc. (hopefully you have a floppy disc, and if not, try inserting the win 98 disc in at bootup (follow the instructions below to get it to have it as a bootup option before the hard drive, and see if it lets you to format the drive before installing the new windows, which it might do))
Then copy the following files to the floppy. They are hidden on the hard drive (usually C: ) To make them appear if you can't see them. Open the main drive, goto Tools, Folder options, View. Where it says 'hidden files and folders' select to show them.
Copy these files to the formatted floppy disc that you should now be able to see on the drive.
Use search if you can't find them, making sure that 'find hidden files and folders' is ticked in advanced as there might be alot of files on the drive.
Restart the system, but now you'll have to make sure that it is set to see the floppy drive first
Go into bios (usually by pressing del at bootup). Make sure that in the first menu i think, the first boot device is set to the floppy drive, the second to maybe the cd rom drive, and the 3rd to the hard drive.
Now save and exit
You are now set. It will notice the floppy disc in the drive and start to boot it because those files make it a boot disc. After all the loading you'll be left with this flashing on the screen
C:\ (or something like that, or it might say A:\
in which case just type
Now it should create a new line saying C:\ (or your main drive with windows on it)
Type this after it:
format c: (or the drive letter your windows is installed on, most likely C)
it will say, are you sure? you type 'y'
It will now do it, and after it has finished, you'll be able to place the win 98 disc in and install it
Hope this works (Sorry about the long post, i'm sure it's worth my time though