I dual boot with 98se and XP for similar reasons.
I'm pretty sure both operating systems need to be on the first physical disc...Just create two partitions on your hard drive, and install Win98 first. Partition Magic is great for this, especially if you already have Win98 on your existing hd. Partition Magic can be used to split the drive in two, giving you two partitions (effectively shrinking your original partition, and taking the necessary space it needs to set up the other partition).
I have a 20gig drive, which is partitioned into two 10gig partitions (was originally just the one partition with Win98SE on it) with Win98SE and WinXP Pro.
It's really quite easy to set up and you don't need a boot manager because XP will set it up for you.
Here is the real quick rundown, be glad to give you more info if you need it.
Back up all important files just in case, do a thorough scan disk and defrag. Use Partition Magic to create another partition on your drive for XP.
After your sure everything is working fine in Win98 and the new partition is ready, pop in the XP disk from within Win98 and choose "new installation". On the screen after you put in the serial number, choose "advanced options" then pick "I want to choose the installation location". The setup starts copying files and reboots, then you get to a screen were you choose where to install it, pick the new partition you created and the installation will finish.
As soon as it's done, you have a dual boot setup and when you boot you will be able to choose what OS to use.