Hmm thats odd... Has Windows Xp ever worked on this system? What about the CD, have you tried a different one to install from? If 98 will install, i dont think it has anything to do with the old suse install.
If you really want linux, try fedora core 2. Dont get fedora core 3 yet, it still buggy (youll learn in linux being the most up to date is not a good idea)
Fedora core 2 will always find my windows xp install and setup a dual boot very easy.
-hope this helps..
Make sure your system is dust free and its not over heating or anything. Maybe try a different cd, different cd drive, maybe some different memory if you got time.
-andy