How to do it
First off, know that in re-formatting your drive there is little you can do to truely mess everything up, since if you do mess up you can simply re-format and re-install. If you aren't sure about something, google it. You need to start by making a boot disk. Goto:Control Panel --> Add/Remove Programs
I believe that to the right (or as a tab to the top) there should be an option for making a boot disk. I can't remember what it says exactly but browse around a bit and you'll find it. Now make the boot disk. After that, make certain that there is nothing else on the hard drive that you want and then restart the computer with the boot disk in the floppy drive. Remember to wave goodbye as the shut down screen appears to turn off your computer. The computer should restart into a command prompt, or give you an option to do so (at which point choose the option WITH cd-rom support). If you don't get any of this and Windows just restarts, then the bios needs to be set to read the floppy drive before the hard drive. You should check with your mother-boards manufacturer to make sure that you don't mess anything up in the bios, since that can truly mess up your computer. Basically, though, you're looking for boot order. You'll want something like:
floppy; cdrom; hard disk
When the command prompt appears first make sure that you can read the cd-rom drive so put the Windows 98 cdrom in the drive and try to go to the drive.
c:\ cd x: (Where x is the letter of your cd-rom drive.)
then:
x:\ dir (This will display the contents of the cd-rom, if it is inserted and working properly. Simply seeing the information on the Windows disk is what you want here.)
As a note, you do not necessarily always have the option to read a cd-rom. Since you made a boot disk it is able to do so since the drivers are on the disk. If you were to format a floppy and simply have it copy over system files there is a good chance that you won't be able to use the cd-rom. If you can see the stuff on the CD, then you're good to go and I imagine that there are few things that can actually go wrong at this point. If you can't read the cd-rom then check online and see if you can download boot disk files from somewhere that has generic cd-rom drivers on the disk. (This shouldn't be a problem since you had Windows make you the disk themselves) Now go back to the floppy drive:
x:\ cd a:
and enter:
a:\ format c:
This will take a little while, depending on the size of your drive and the processor your are using. I imagine that it could take up to a half hour for a 40 gig drive, but thats just an estimate. After it is done formatting go back to the cdrom drive:
a:\ cd x: (Once again, where x is the letter of your cd-rom drive.)
Now execute the setup program:
x:\ setup.exe
At this point the Windows cd-rom should take over and will install the operating system. It will certainly prompt you for some things, and the installation takes about an hour (from what I can remember) but its all stuff that the cd-rom will explain when the time comes.
This information was refreshed into my own memory thanks to:
http://www.helpdesk.umd.edu/topics/troubleshooting/os/windows_2000/4349/