OK, I understand your context.
The Windows line hasn't had to contend with management of the 640K and <1MB RAM space as a direct user-accountable activity since at least Windows NT. Most assuredly Windows XP won't even offer that level of control to you.
If you have a machine that's so old that it only has a few MB of RAM (under which optimization of the <1MB RAM threashold was very important) then you will NOT (most likley) have a BIOS that supports big disks. Frankly, WinXP isn't much good to you without 32MB of RAM or greater - but consult MS on that.
Switching gears to Linux. Linux is probably very efficient at managing RAM in terms of making space for core OS (kernel) and user space (applications/data) across the entire RAM addressible space.
In short, (and thanks for the reminiscence) any emm386 management activities are LONG since dead with OS' of the last 7-10 years.
In terms of a recommendation... I think your jump from Win98 to anything from the last 2 years will incur some activity. WinXP would be nice, Win Vista is now on current hardware sold new.
Linux has the advantage of having multiple choices from the GUI presentation of your desktop and a little research may allow you to find a "window manager" that creates a comfortable transition for you.
A really nice way that new users to linux get their feet wet is to download and burn a bootable CD or DVD with a linux distribution on it that doesn't require installation. These are called Live CDs or Live DVDs or Live distributions. One of the most frequently mentioned is Knoppix.
These live distributions will boot from your CD/DVD drive and will allow you to experience quite a bit of a "real" linux environment without having to alter anything on your existing system. Once you've had your fun with the live distro, just remove it, reboot, and your system is back to where you came from. No changes made.
Try it
Good luck!
D.E.R. Management - IT Project Management Consulting