Maybe It can help, I've W98SE, WXP, and Linux Mandrake 8.2. Of course XP use the MBR in my disk (where you can choose WIn 98 and XP).
What I do is simple (cos I know how to do it now.....
I've created a new ext2 partition on my disk.
Then I've Installed linux Mandrake 8.2 (booting from CD 1)
using Simple (no expert mode),
then linux automatically found the ext2 partition and you choose it to install linux there.
At last it installs LILO with W98, WXP, and LINUX items on the MBR menu...
When you choose W98 the system starts the WXP menu.
When you choose WXP it doesn't found the drive (of course a problem on mounting drives but you can use the W98 item to Run WXP cos of the WXP menu....)
When you choose LINUX the show starts
So delete the "WXP" entry and rename the "W98" to "Windows(98 or XP)" on LILO config.
This works great for me and I hope It help you too.