You have run up against the FAT16 2Gb limit, see
here.
Win98 does support FAT32, but, If your computer uses drive overlay software to enable large hard disk support, the drive overlay software must be installed before you install Windows 98. Check out the Compaq support site.
If not needed, or after installation, reinstall the Win98 and run FDISK. When asked "Do you wish to enable large disk support (Y/N)?", select Y to format as FAT32. See
here