Without upgrading the ram to at least 256mb to run Linux. Modern Browsers and flash are cpu and ram hogs.
All linux distros are good depending on the end user. A base Debian,Slackware install will run on those specs.
will run on it but 256mb of ram is recommended for a good user experience on a P2 laptop like yours running Iceweasel Browser.
Tiny Core Linux
is another option. But 256MB of ram upgrade I would still recommend for a pleasent experience.
I run Lighthouse Puppy 5.03 on a broke down lcd ibm a22m laptop but I upgraded the ram on it to 256MB from 64MB and run it as a full install instead of frugal install. Use a crt monitor on it till I fix the lcd screen. It runs wireless pcmcia card.
Here is a guy dualbooting Puppy 4.31 and Windows 2000 on a Compaq with about the same specs as you (a little more ram, (160MB) http://www.murga-linux.com/puppy/viewtopic.php?t=57419
/swap partition of 512MB will be a must have also. If you are not doing anything with it like upgrade the ram or hard drive and are worried about Windows 98.
or should I stick with Windows, since I can't reinstall if I get rid off it.
Then by all means keep Windows 98 on it unless you know how to make a backup image using Clonezilla or dd command of Windows 98 to a external drive. Or. Get a larger hardrive and clone Windows 98 from one drive to the other and then dual boot with a larger hard drive.