Check out Linux.org.
I cant remember the name but ages ago i had to do the same thing, i downloaded a small version of linux that was designed for backing up. It allowed me to transfer all my files via the LAN. WinME one day decided some files had been delete and it wasnt going to start without an re-install. It was about 30megs this Linux thing, burn it to a CD. You would need another PC though to burn, It might have supported USB, or there might be one around that supports USB.
Or you can re-install windows without formatting, I have done it with XP, sure its possible with 98?