Atmos5 - you need to create a boot sector on the XP disk (for XP) & then best recreate a proper 98 boot sector on the 98 disk (currently its got an XP one, that is controlling the M$ dual boot).
To do this:-
1. Copy the files ntldr, ntdetect.com & boot.ini from root of C: to root of XP install (you've got 3 disks - so i don't know if that's disk 2 or disk 3 - I presume one is for data only?). Edit the copied boot.ini to remove the C:\="Microsoft Windows" entry. So should have something like:-
[boot loader]
timeout=30
default=multi(0)disk(0)rdisk(1)partition(1)\WINDOWS
[operating systems]
multi(0)disk(0)rdisk(1)partition(1)\WINDOWS="Microsoft Windows XP Professional" /fastdetect
(assuming XP on disk 2)
2. run recovery console & fixboot x:, where x: is XP drive as seen from recovery console.
3. Reboot & try boot-us again - it should now boot the XP installation directly. If it doesn't (I think it will, but...), you may need to experiment with boot.ini on XP - eg try:-
[boot loader]
timeout=30
default=multi(0)disk(0)rdisk(0)partition(1)\WINDOWS
[operating systems]
multi(0)disk(0)rdisk(0)partition(1)\WINDOWS="Microsoft Windows XP Professional" /fastdetect
Once this is working ok, you can restore the 98 boot sector if you wish - boot from 98 boot floppy and run sys C: from the A: prompt. Alternatively, you could continue to use the XP boot loader - just remove the XP entry and it will boot directly into 98 when you select entry from boot-us menu:-
[boot loader]
timeout=30
default=C:[operating systems]
C:\="Microsoft Windows"
You can also edit what boot-us puts on its menu (eg, remove second XP if its only data & not bootable).
PS. Creating a 'rescue' XP boot floppy is a good idea - just copy ntldr, ntdetect.com & boot.ini from root of C: to newly formatted floppy. Will boot both 98 & XP - particularly will boot XP even if you corrupt/damage the hard drive boot sector(s).