For current versions of Windows, Diskeeper pro is my preferred defragmenting program since it can be set to automatic defrag and does a great job.
However, for Win 98 none of the current Diskeeper versions work, so I'd suggest that you check out the free Diskeeper Lite from a few years ago. It is freeware and can be downloaded from here:
http://www.majorgeeks.com/download.php?det=1207
It ought to defrag Win 98.
