yeah I think the issue could be related to your SATA drive...

Also, you shouldnt have to install win98 first then upgrade...

just boot with XP CD, watch the screen carefully, down the bottom it will say press F6 now if you need to add new drivers for RAID or SATA etc etc... press the button then insert driver floppy disk or CD, then it will ask to put back XP cd and continue...

all should be good after this... hope it helps.