So now the only problem you're having is:
Win98 is not sharing files, cannot see WinXP in Network Neighborhood
Is that right? If so, understand that something is really wrong on the Win98 box. I know you've already removed and re-added all the protocols, but you want to try again. The problem is that Sharing... won't appear, so it has to be a missing file or registry entry.
If a 2nd attempt to remove and re-add all clients, protocols, and services fails, then consider reinstalling WIn98 on top of itself. This will ensure that any missing files are replaced.
After all that, still no dice?? Then you've probably got a corrupt registry. Hate to say it, but you're looking at wiping the HD and doing a clean install of 98.
Hope it works out for ya!
~cdogg
"The secret to creativity is knowing how to hide your sources."
- A. Einstein