Select what is not vital for the operating of the OS.
Run a good reg cleaner from safe mode.
Understand win98 is unlike any other os out there. Very little drivers for any of the hardware you may use. If you have a device like a LAN card you want to install the os will ask for the os cd. It has to have certin files off the os cd. If you can't supply them then you're dead in the water. A p2 or p3 with at the least 256 megs of pc100 ram will support xp home. I run xp home on a p2 266 with 256 ram. If you are in that range or above I suggest you upgrade the os. Sorry about being a wet blanket but I have used win98se since it came out. Need that disc.
Some shops will sell you an OEM disc for about 100 dollars American. Might have to buy a bag of screws to keep in M$ policy about OEM.
As for how to get rid of 98 just pop in the xp cd and follow the instructions as they appear. It does it all.