After upgrading to Windows 98 Second Edition and Office 2000, adding a second hard drive, converting to FAT32 and adding Norton Utilities, performance has degraded noticeably. There seems to be excessive drive head movement, with programs and files taking ages to load. And Windows Explorer takes as many as seven or eight seconds to display submenus. It's impossible to say for sure what is causing your performance drop. But here's what I'd check.
New applications tend to make more demands on memory, as well as on disk space.
If you add another 64 megabytes, you're likely to see a performance boost when running memory-hungry applications. Second, you don't say whether you ran Norton Speedisk to check for disk fragmentation, but if you didn't, do so now. As you delete and then add files, there may not be enough room to save a file in consecutive clusters. If that's the case, Windows performance can drop considerably. Finally, check to see if some application is hogging processor time or Windows resources.