OK. You would have to complicate it by wanting to keep the original 98 installation, ah well, such is life. Actually 98 is probably the most forgiving in this sort of situation. Backup all important data! Set 98 active. Take an image of the partition with Acronis or Ghost or Bootit-ng (haven't tried this one, but if Nobus likes it, it works). Verify and set aside. Boot 98. In Boot Magic, set XP active. Uninstall Boot Magic. Check that XP now boots directly. If it doesn't, boot to your XP CD, enter recovery console and execute fixboot and fixmbr. Now it will. At this point (or later) you can delete the 98 installation or drop the partition and expand XP to the whole disk. Unplug the disk and setup the second disk as master. Load the image and see if 98 will start. If it has a fit, just boot to your 98(SE) disk and do an over the top install. Now it should run happily. Note that if your 98 disk is first edition you must boot to a floppy. Once it is running, install the XP disk as slave, reboot, 98 should start, install boot magic and setup the dual boot.
Have fun
Chris B