OK, here goes (keeping it simple)
Looks like "Dos" is looking at the D:\ drive expecting the commands located there, when they are on a:\.
At the first prompt, type path=a:\
Then type format c:\ /s
This should then let you format the C:\ drive as a system partition.
Let me know if this works, otherwise I can post the instructions for creating a bootable floppy.
Also, idea #2
Can you not just boot off the CD and create a clean install of Win98?
Regards,
Shuttlebus
P.S. Sorry, Win98 is not Win2k or XP which let you vapourise partions during the install... scrub solution 2.....