You COULD use your existing OS installation, but I wouldn't recommend it. You won't get the performance out of your system that you should. Plus, if you are planning on using more that 512MB RAM, forget using Win98SE.
I would recommend you back up all your important data, and do a clean install of either 2000 Pro or XP Pro. Also make sure to install all the latest mobo/chipset/AGP drivers from you mobo manufacturers website.
Good Luck.
Spec:
Intel P4 2.4B
MSI 645E Max-U Mobo
1GB DDR333
R9600XT 128MB
SB Live 5.1
WD 60GB
Maxtor 120GB
LG DVD+-R/RW
WIN2K PRO SP4