Win98 and XP use slightly different versions of certain binary files, especially Internet Explorer.
Which is stored in c:\\Program Files\\Internet Explorer
Unless you hack the install disk, there is (almost) no way to move this to another directory - and you'll run into version differences, eventual crashes, problems, explosions, and just general Bad Stuff.
Not that this is any different from the Usual Windows Experience, but I feel the need to warn ya in advance...