Be sure your data is well backed up.
When you put the CD in the drive while at the 98 desktop, after the setup
screen appears and you choose setup, be sure to choose upgrade as opposed to
new install or it will install separately from 98 and you'll have a dual
boot setup.
Before making this change, if you already have the XP CD, when the setup
screen appears, first choose, "Check System Compatibility" as you will need
to know if you have any hardware or software issues. If you don't yet have
the CD, download the upgrade advisor from the site below as it can tell if
there are potential issues. Don't overlook anything or pass it off as
trivial as the smallest seeming item can cause setup to quit and in an
upgrade, that might leave you without your 98 setup as well and you'd have
to start over from scratch and if you didn't back up your data, they'd be
lost.
Here's the site for the upgrade advisor:
http://www.microsoft.com/windowsxp/pro/howtobuy/upgrading/advisor.asp
Be sure to bring your applications up to date for XP and all your drivers
before moving to XP. It also would be best to uninstall any firewall and
antivirus software before upgrading as either application can interfere with
installation. If you CD burning software, it's advisable to remove that as
well and be sure you have versions compatible with XP for installation on XP
as most earlier versions of such software needed upgrading for XP, the same
for firewalls and antivirus software.