Create a New W98 Boot diskette and this time be sure to "Write Protect" the floppy diskette before you boot to it in the bad PC. Don't reuse any boot diskettes that you've used to boot in the bad PC. If you do have a boot sector virus, the boot diskettes are most likely now infected, too. Don't even put them in good PCs. Just toss them in the trash to be safe.
Then boot to the new "write protected" W98 boot diskette and use the option to "Start Without CDRom Support".
At an A:\> prompt key in the following,
FDISK
Leave the default set to "Y" for large disk support and press enter.
Now use the option to "Delete Partitions". Delete any and all you see listed. Now take the option to "Create a Partition" and create a "Primary DOS" partition. Take all of the defaults during the Primary DOS partition creation.
Then after the PC has restarted, run your Format C: again.
Then restart the PC again and but this time take the option to "Start with CDRom Support" and see if it starts now. I suspect your CDRom drive isn't going to get support with the W98 Boot diskette but try it first and see. I think your going to need to load the drivers manually or use something like <a href=http://jumpstationz.com/download.htm> CDGod <a/>. I'd suggest trying CDGod. Download the CDGod55.exe to the Desktop of a functioning Windows PC. Insert a blank floppy diskette and then run the .exe to build the CDGod Boot Diskette. You can just run it from a DOS prompt right within Windows.
c:\windows\desktop\cdgod55.exe a:
Then boot to the CDGod Boot Diskette on the bad PC. You'll be presented with 50 or more CdRom drive options. If you know the make and model of the drive, select that option and see if you get support. If not, keep trying different ones til you get support. I've never seen a PC that can't get support from at least one of the drivers that CDGod has available.
Once you get support, make note of the drive letter it assigned to the drive and then just run setup from your W95 CD.