er0k,
[1] Use a low-level format utility to completely erase the disk
(Search Google for one made by the HDDs manufacturer)
[2] Partition it and format it using a boot disk with newish fdisk and format (FAT32 capable, i.e. not a Win95 boot disk)
[3] Run scandisk with a surface scan & enable the check bad sectors option
[4] Get a Norton Ghost or equivalent (Nero hard drive backup?) image from a system known to work, and image it onto the HDD rather than installing 98 directly
[5] If these fail, check the hdd in other machines and check if its other hardware causing the problem
[6] failing that, try a different OS (linux) to see if it is an isolated problem with Windows 98n only (in which case, try 95 or something else (Windows 3.11!!??, DOS6.2, Windows NT?)

Hope at least some of that helps!