I'm not sure if you know this already, but if you install WinXP as a new installation onto a different drive/partition from your Win98SE, they won't conflict so it won't matter if they "see" each other. In fact, if the file system is NTFS, Win98SE won't even be able to read the WinXP partition.
Here's my setup: two hard disks. On my primary HD, I first have a Win98SE FAT32 partition, then the rest is an WinXP NTFS partition. On my second HD, it's another WinXP, NTFS. So, I have a Win98SE and two WinXP's installed, but the one on the primary HD has less free space (and the HD is slower) so I just use the second one.
Anyway, I didn't want to get into all that technical jargon. All I'm saying is that XP has a built-in dual-boot capability with your existing O/S and that as long as they're on separate partitions (separate drive letters) it doesn't matter which Windows sees what.