What you need to do is to setup the DHCP server on your primary machine, ie: the machine that controls your internet. (Your XP Machine)
Login to your XP machine, goto:
Section 1My Computer, then on your left there will be a menu, with text links, to things such as "View Network Connections", "My Network Places", goto "View Network Connections", now, right click on your Network Connection, it will be called something like: "Local Area Connection".
Once you have right clicked on this network connection, you will have a small menu appear, click "properties" at the very bottom.
You are now presented with a new box, at the top of the box there are things called "tabs" these stick out like bookmarks do, when in a closed book.
You should have a "tab" called "General" click it, now you will see in the middle of the box there is a white area, with some tick boxes, it may look like this:
[ ] Client for Microsoft Networks
[ ] File and Printer Sharing for Microsoft Networks
[ ] Internet Protocol (TCP/IP)
these should all be ticked by default..
Now, click on the text named: "Internet Protocol (TCP/IP)"
At the bottom of this white box there are three buttons:
"Install..."
"Uninstall"
"Properties"
Goto "Properties" (whilst you have the "Internet Protocol (TCP/IP)" highlighted (selected), now you will be presented with another window / box, at the top it should be called "Internet Protocol (TCP/IP) Properties".
And you will see that you are on the "General" "tab", there will be some text describing what you can do, and below that there are 4 circular tick boxes.
Your Options are:
"Obtain an IP address automatically"
Use the following IP address"
and
"Obtain DNS server address automatically"
"Use the following DNS server addresses"
Section 2
Now make sure that out of the above options i have mentioned this is the combination of ticked / unticked:
"Obtain an IP address automatically" - Should NOT be selected or ticked
"Use the following IP address:" - Should be ticked
"Obtain DNS server address automatically" - Should be ticked
"Use the following DNS server addresses" - Should not be ticked
Now when you ticked the: "Use the following IP address:" option, you should then be able to fill in (specify) 3 things:
"IP address:"
"Subnet mask:"
"Default gateway:"
Set them to this:
"IP address:" should be set to: 192.168.10.1
(where i put the full stops is where the full stops are already placed in the box where you input the numbers or "IP address")
Now leave "Subnet mask" and "Default gateway" alone, and click "OK" at the very bottom of the box.
Now click "OK" Again, on the first box you brought up, which will still be open.
Now goto your other computer.. your Windows 98 machine, and follow my instructions up until Section 2, now use this configuration:
The only options on your windows 98 machine that should be ticked are:
"Obtain IP address automatically"
and
"Obtain DNS server address automatically"
Section 3
Now goto your windows XP machine, right click on "My Computer", select "Properties" there should be lots of different "tabs" available, select "Network Identification"
Now change your "WORKGROUP" to: "MYNETWORK" (without quotation marks)
click "OK", then "OK" untill it asks u to reboot your PC for the changes to take effect, now reboot your computer.
Now, goto your Windows 98 machine and do the same, although in Windows 98 it may not be called "Network Identification" it may be under something similiar like "Network" or "Identification" and change the "Workgroup" to "MYNETWORK" (without quotations), then click "OK", e.t.c until u get out and u are prompted that "For these changes the take effect your pc needs to be restarted". click OK to restart, or just restart..
You will now be on the same network :)
Hope this helps, its from memory as i have no win98 or xp machines near me, but i'm sure its pretty accurate.