WindowsXP and Windows98 SE can network together just fine. I have a setup running like this right now, with two XP machines and a 98 machine, in which all three can communicate with eachother. The WindowsXP network wizard does exactly what it's supposed to do, but there is no wizard in 98.
Usually when you can't see eachother it might be because you aren't in the same workgroup. XP Pro defaults your workgroup to MSHOME when you run the wizard.
Sometimes you have to have at least one file shared in 98 for anything to be seen at all. Make sure file and print sharing is on, too. I dont have an immediate solution, but 98 and XP can be networked without problem. Shares longer than 12 characters won't show up, though. i think.
you can probably manually assign the IP addresses if all else fails...
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