this may sound silly, but with my MB i MUST use "cable select" on the jumpers.
i originally had them set to master and slave, and in the proper places on their cable, but just like you, no go.
also, sadly and i mean this just because i have done it, checked the cables, checked again, slept overnight, went back and looked again, and found 1 was reversed. it can happen, and i have done it where i swear up and down they are right.
lastly, in win 98 isn't there something in the win.ini or related files that sets drive letters manually? could that be corrupt, or trying to assign something to the drives?