Nevermind. I finally got it working.
I just installed debian jessie on a desktop PC. Ran the update and upgrade. And then I simply ran the apt-get install for qemu. That allowed me to do the entire win98 install on the desktop PC.
After installing qemu, I used the following command to create the img file:
qemu-img create win98.img 1G
Then I used the following command to install windows from a win98 ISO created from an original install disk.
qemu-system-i386 -localtime -cpu 486 -m 256 -cdrom d win98se.iso -boot d -hda win98.img
Doing that resulted in a quick, clean, problem-free windows 98 install. It bypassed all the Win98 installation problems I was having on the RPI. And this works much better anyway since the desktop is a much faster PC to work with.
After the win98 install, I took the resulting img file and copied it over to the PI. And then I used these instructions to get qemu running on the PI.
After qemu installed, I used the following command to run 98 on the RPI.
qemu -cpu 486 -m 256 -hda win98.img
It's slow, but seems to work great. The only problem I have found is it does not close cleanly. It always hangs on shutdown which means it always does a scandisk when it restarts. If anyone has any ideas how to fix that, I'd love to hear them.