The nominally right [Microsoft] way to do it is to start with a blank
hard drive, create a partition and install Windows 98SE on that
partition as drive C:.
Then create a 2nd partition installing XP into it. If it's FAT32 (which
it must be be for 98SE to see it, although this is optional), it will be D:.
In my own case, I then created an E: partition for all data, which is
fully shared by both OS'. That is, "My Documents" exists on E: and is
used by both OS'. I have arranged (with difficulty, in some cases) for
all of the programs that are installed on both OS' to use the same data
files. That is, I can use Win98se and outlook 2000 to access my E-Mail
".PST" file, then use XP and Office 2003 and access the same E-Mail PST
file. Both OS' fully see work done in the other OS. Similarly, I have
a common profile for Netscape (which I use as my main browser), also
Quicken, Microsoft office, etc. Again, it's not always easy to
configure things this way, some programs didn't intend for you to
manually manipulate where they keep their data files. My hard drive
also has F:, G: and H: partitions. All partitions are FAT32 except for
H:, which is a large (80 gig) NTFS partition for video editing. I made
sure that H: began before the 137 gig barrier, which conveniently
avoides the issues that Windows 9x can't use any space beyond that barrier.