XP has a lot more drivers included in the OS. With '98 you may need to add drivers manually.
I would up the RAM to 512 MB, or more, and only use XP.
What are the rest of the hardware specifications like, drive speed partitioning, drive buffer, foramtting?
Was the drive partitioned with diskpart and formatted with the XP CDto HPFS/NTFS or was fdisk and format to FAT32 used?
Do you only use FULL formatting when preparing a drive? Quick formatting is only good for deleteing files really.