Tartan Giant
If you can wait a few days, I can tell you exactly what happens. I've got a new PC arriving with 98se pre-installed (long story), so I've gone out and picked up a copy of XP home. I'll see if it barfs when trying to install over a "restore-only" installation of 98, but I actually own a full copy of 98 anyway so it will install one way or the other.