What is the Largest Hard Drive that Win 98SE can handle. Can it be formatted NTFS ?

Windows 98 using FAT32 can max at 128 GB. No Windows 95/98/98se*Grinler cannot use a NTFS partition, although W2000 and XP can use either FAT or NTFS.

You need the FDISK update for any drive >= 64 gig
See http://support.microsoft.com/kb/263044

Edit: Also note.
Assume that the BIOS sees the drive correctly.
The limit is 128 gig as Acklan said.
Fdisk, even with the update, will misreport the size of the drive.
This I know from the school of been there, done that, more than once.

When you format it, it might take an hour+.
To give you an idea, if you format an 80 gig hard drive that will take between 45 minutes to an hour.
Then the drive size will be then reported correctly.