If you are using Windows 2000, you can edit the Group Policy under the WinNT-2000 tab of your policy package. Clicking on edit should open up the group policy editor. Look under User Configuration --> Administrative Templates --> Windows Components --> Windows Installer and find "disable media source for any install".
This will only prevent installation from a removable media (cd-rom, floppy, zip drive, etc.). I haven't seen where this can be done on 98 machines.
Hope this helps.