For the windows 98se machine, you will have to install drivers to get the usb drive to be recognised and work. You must load the drivers before you plug the drive into the windows 98se usb port.
When you have the drivers loaded on the 98se machine, just plug in the usb drive.
Then it's just a case of plugging in the drive into either the 98se or XP machine. It will show as a removable drive. You just then drag and drop any file you want into the associated drive letter of the usb stick.