As far as I'm aware you don't need to install Win98 or ME when installing XP if you are doing it from a retail (upgrade) version, just insert the XP disc to install and during the installation process you will be asked to insert the '98 disc, and then re-isert the XP disc. Found the following if it gives you any clues:-
Windows XP needs it so instal.
Adam Ehrman Shapiro
iastor.sys is the intel matrix storage manager driver file. You may be able to start and stop it but once windows loads it's always running anyways if you have a HDD controller that needs it.
Mike (further information)
This file was made by Intel to give Windows more access to the harddrive. It is a file that Dell machines will request upon an installation of windows xp.
If you have RAID configuration do not remove file!
Roni (further information)