Tony,
If the separate IDE channel option doesn't work for you then you could try installing Win 98 over the top of Win 2000 using the methods on the
Microsoft Knowledge Base page that FL310 suggested. There it suggested that you simply rename the folders you want to preserve and run the Win 98 installation.
However, success will depend on exactly which version of Win 98 you have on disc.
1) If you have an OEM version - this won't work since it requires a blank partition that does not already contain an operating system.
2) If you have an Upgrade version - this searches for a pre-existing version of Windows so it will all depend on whether Win 98 upgrade is willing to recognise Win 2000 as a previous version.
3) If you have a full retail version of Win 98 - this may not care that there is a previous OS on the partition and certainly shouldn't require one to be there. So you should just be able to rename the folders of the stuff you want to keep and install.
I think that only the upgrade version would allow you to preserve your program installations - so you may just be able to preserve your data and will need to reinstall the software.