Ok. I started completely over again and took shots with a digicam. Heres what I got.
Wipe out the c: drive with the 98se starup floppy:
Boot from the XP cd and format the drive (again) in NTFS:
Now, the format is complete... Setup restarts the computer and jumps immediately to what you see here. Never asks for any info from me. Just goes right to step 4, Installing Windows:
It the reaches this point and the computer completely freezes: