Get a boot image from the Net. Because of where I am in London, I used the UK sunsite mirror . Look up the Red Hat mirror list for whatever is best for you. Write the boot image to a floppy disk. Even though the drive is USB, this works fine.
Install procedure continues.
Altogether I picked up 379 pkgs for a total of 601M, taking 2h30m. I asked it to write to MBR and floppy. This way of setting things up zaps the MBR and lets LILO manage the boot process, eventually, from the W98 partition. Linux runs and boots , but the Win98 partition is invisible and inaccessible. This lilo.conf is the file I actually used in its entirety.