That's exactly what Partition Magic is good for!
However... there may be an issue with the formatting of the "data" partition...
When you boot into win 98 the partiton with Win2k on will not be visible, and vice versa. if you want data to be visiblre to both OS's you will need to make a data partition as well. This will be the "D" partion when the system is booted up.
I'm pretty sure that is you format it as NTFS win 98 wont see it.... I'm not sure if it can be seen by Win2k if it's FAT 32. (Others will better advise on this),