You can dual boot Windows XP and 98, though you have to be careful and do things in the correct order otherwise you may end up effectively making a drive/partition inaccessible.
The first thing to do when installing another operating system is to create either a new partition or install it on a second hard drive - Installing an operating system on the same drive as an existing installation is asking for trouble, especially if the new installation requires a change of file system - Bang goes not only your current Windows installation, but all of your applications and data too.
There are several things you could have done to cause symptoms similar to these - What I hope is that you've installed Windows 98 on a different partition but have failed to create a boot.ini containing the reference for your XP installation - i.e. You've not set up the dual boot environment. If your XP installation is on an NTFS partition, 98 will not find it hence why it doesn't come up in My Computer.
Your best bet is to use something like Partition Magic to analyse your disks, as a recent version will be able to locate and read NTFS partitions. That will tell you if your XP installation is still in tact and if so, you will be able to set up dual boot paramaters and all will be well. Unfortunately, I'm not sure if that will be the case as you implied that you tried to install 98 on the same partition as XP which really isn't a good idea.
If it turns out your XP installation and data is gone, your best bet would be to backup any data you have that you wish to keep and start from scratch. Set up at least two partitions, one for each OS, and any further partitions you want to put games or applications on using either FDisk or something like Partition Magic. Then, install Windows 98 on a clean partition, preferably SE if possible, and then install Windows XP on another clean partition. What should happen is that Windows XP finds the 98 installation and offers you the option of dual booting - That is what you want. Unfortunately, you did things the other way round, and whilst it is possible to dual boot installing in that order, it's a little more complex and if you have indeed lost your data, it would be quicker and simpler to do the above.
If you have any more information that might help, let us know and we may be able to narrow things down for you - Unfortunately, without knowing whether you installed 98 over the top of XP or not, it's impossible for us to tell whether your old data is still there.