It sounds like the install of XP is pretty badly messed up. First, try booting from the XP CD and doing the Repair option - it copies back over a bunch of system files, hopefully that would fix things. If not, try reinstalling XP overtop of itself.
You say this was an upgrade from 98. Can you reinstall XP without touching 98 at all? If possible, I'd recommend getting 98 as far away from that system as possible.
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