Panic not -- all you need to do is boot up with a Windows 98 startup floppy. When the menu appears, choose "Start Computer With CD-ROM Support". At the DOS prompt run FDISK to delete the NON-DOS PARTITION, use FDISK again to create a PRIMARY DOS PARTITION, then FORMAT the new partition. Now Windows XP is completely gone and you can install Windows 98. You can download a Windows 98 boot-floppy from http://www.bootdisk.com
if you don't already have one.
See here for a step-by-step tutorial on using FDISK (FDISK is on the boot floppy):http://www.onecomputerguy.com/install/fdisk.htm
To format the new partition, simply type FORMAT C: at the DOS prompt and press [ENTER]
Just remember to carry out the whole process in this order:
1. Delete non-DOS partition with FDISK.
2. Create a primary DOS partition with FDISK.
3. FORMAT the primary DOS partition you just created.
4. Install Windows 98 from CD.