In the XP PC, check that "Internet Connection Sharing" is enabled on the actual internet connection in the Network Connections folder. Right click the icon, select Properties then the Advanced tab. The box should be ticked for "Allow other network users to connect through this computer's Internet connection".
Check that the XP 'host' PC has the IP address 192.168.0.1 subnet 255.255.255.0 in the TCP/IP settings for the Local Area Connection. The 98SE 'client' PC should be set to get its IP address automatically. Any firewall software needs to be configured to allow access to the IP addresses of the two networked PCs.