Will you want to use the laptop in the future, and possibly want to transfer files / share data or peripherals or share internet connection? If so, you might want to look at buying a 4-port hub / switch rather than a cross-over ethernet cable to link them together (assuming that you have got network cards).
If you can connect using a network connection, it is much easier for the desktop running XP to access the data on the Win 98 laptop than vice-versa, due to permissions, etc. on XP.
If the laptop doesn't have a network card I'd go with fobotcso's suggestion, or buy a USB disk caddy that you can put the laptop disk into as a permanent USB external HDD (but not if you want to keep using the laptop, obviously). You can buy such caddies with disks in, but they are more expensive.
SD