If it failed even one test in any pass, this is the problem. How much RAM is installed on the machine? Just for future reference, Windows 98 only uses the first 64 MB of RAM during it's install process. Windows XP needs more than that to install properly and a bad stick will give you the problems (failing to copy files) you were experiencing.
I think it's pretty much failed every test.
There is only one stick in the computer.. it's a 256mb. I suppose I just need to get a new one, but I am not sure where to get one from. Are their any others that are compatible with this laptop?