Windows 98 didn't really have a large "footprint" compared to XP and Vista. Most of the old Win98 files were probably overwritten by XP if you did an "Upgrade" to XP, so I don't believe the old Win98 files are really eating up that much of your drive space.
Question - how large is your hard drive? How much free space is left? (Open My Computer, right click on C: drive, click Properties). Is this a desktop or laptop PC? If so, what is the make/model?
Did you attempt to run disk cleanup in XP? If so, did it clear up any space? Have you emptied your Recycle Bin?
Go to Control Panel, Add/Remove Programs and uninstall any programs you're NOT using. Be careful NOT to uninstall software specific to hardware such as printers, video cards, sound hardware, etc. Eliminate any applications or "bloat-ware" that you're not using and this should free up some space.
Open up Internet Explorer, click on Tools, Internet Option, Delete Files, check "Delete all offline content". This should free up space.
If you've got video files, documents, pictures, music files, etc in your My Documents or elsewhere on your PC that you're no longer using, consider deleting the stuff you'll never need again and/or backing up those files to removeable media (CDR, DVDR, Flash Drive, External USB Drive, etc). It doesn't make sense to keep data on your PC that you're unlikely to need access to. With a backup - you can always restore those files at a later time if necessary.
If you had programs installed under Win98 that are no longer being using by XP but don't show up in XP's Add/Remove Programs, you can use an uninstall program to clean up those old programs/files:
If you have a desktop and your hard drive is small and/or full - it's not very expensive to add an additional large hard drive or replace the small hard drive you currently have. Laptops are a different story - which is why I asked if you had a desktop or laptop.
How old is your PC? I ask because if you were running Win98, it's not a new system. I say this because hard drives don't last forever and if this is the original drive that was running Win98, it's probably not got too many good years left in it. That said - you definately want to do a full backup and may want to consider replacing/upgrading your drive before it dies. If a drive PC lasts 4-6+ years, consider yourself VERY lucky.
Hope this helps.