On WinXP, u want the following components...
file and printer sharing for ms networks
client for ms networks
TCP/IP
on TCP/IP properties, put the IP in as 192.168.0.1, subnet as 255.255.255.0
click advanced (still on TCP/IP properties) and go to "WINS" tab and select "Enable NetBIOS over TCP/IP". Click OK on everything til you're back at desktop.
On Win98SE machine, u want the following components...
file and printer sharing for ms networks
client for ms networks
IPX/SPX
NetBIOS
TCP/IP
go to IPX/SPX properties and select "Enable NetBIOS over IPX/SPX". Click OK
go to TCP/IP properties, put in the IP as 192.168.0.2, subnet as 255.255.255.0
choose the "gateway" tab (I think its labelled that), and enter in 192.168.0.1
choose the "DNS" tab and enter in that machine's name (for example "WIN98SE" - or whatever the name for your Win98SE machine is) and enter in the workgroup name in the domain field.
Enter 192.168.0.1 in the primary DNS field.
Click OK until you're back at desktop - chances are you will need to reboot as its Win98SE
Should work fine, those are the same settings I've used in work to get Win98SE and WinXP networked.
If it doesnt work at first, try turning off both machines, wait a moment and turn on the WinXP machine. When that reaches the desktop, turn the Win98SE machine on and try then.
Best of luck
edit:
one more thing... set a user account on the WinXP machine with the same name and password as is used on the Win98SE machine, although you can then use any account on WinXP, and it should work OK.
I've found that sometimes it needs it, sometimes it doesnt - I've never figured out why though.
another edit:
if you still cant get it going, or are unsure about where things are, next time I do a Win98SE machine onto a network with WinXP, I'll take screenshots of the settings and put them on my website - it could be extremely useful for many people including yourself