You can skip step 3 because you have already put the files on the 98 with the cd
Did you Share your C drive on the 98.
I am not sure how much knowledge you have so forgive me if I am asking things that seem obvious to you.
If you are running the Network Setup Wizard on Windows XP, you must be logged on as an administrator in order to complete this procedure.
Start Network Setup Wizard
Follow the steps on your screen to configure your home or small office network.
When you come to the page that reads, You're almost done, insert a blank, formatted floppy disk into the drive, and then click Create Disk.
If you have already run the Network Setup Wizard, and did not create the floppy disk, you will need to run it again to create the floppy disk. When you do so, you must enter the same information for your network as you did when you ran the wizard the first time.
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To start the Network Setup Wizard, click Start, click Control Panel, click Network and Internet Connections, and then click Network Connections. Under Common Tasks, click Network Setup Wizard.
The Network Setup Wizard can only be run on computers using Windows 98, Windows 98 Second Edition, Windows Millennium Edition, or Windows XP.
Run the wizard on the Windows XP host computer first. The host computer is the one sharing its Internet connection.
Before running the Network Setup Wizard on computers running Windows 98 Second Edition or Windows Millennium Edition, make sure Internet Connection Sharing is disabled on these computers.