If you want to try and get the USB working on the 98 machine try this. It is a bundle of fixes from microsoft to improve USB on a 98 machine.
http://www.usbman.com/win98seusbguide.htm
You do not need to mount the drives inside the computer just to copy files. You can mount the floppy or the extra HD externally. Make sure it is sitting level and on a cardboard or wood surface. I use a tissue box or the back of a notepad. The picture below is a fully function computer I use for testing questionable hardware. Do this to connect the floppy to load drivers.