Workarounds:
1) Use a virtual machine, as suggested before. The virtual machine runs Windows 98 and the program. VirtualBox or VMWare would be best to do this with, since they have USB support for your dongle. Virtual PC 2007 has no USB support.
2) Dual-boot. However, that makes it a pain in the rear for the end-user that wants to run the program as well as anything inside XP.
Long-term solution:
1) Look for a new version of the program. Dear god, man--nobody can purchase Windows 98 anymore, and your program is only compatible with an OS without support?
I would suggest Workaround #1 above as a stop-gap to buy you time to get your act together and get a new version of the program--something that will run not only in XP, but in Vista (32 AND 64-bit) as well!!