Do a quick test. You said BIOS picked it up right? Put the CD-ROM as the first boot device.
Pop the win98 CD into the CD-ROM and restart computer.
If you get a win98 menu as it starts up, then its something messed up in windows. If it just goes straight into loading windows, your CD-ROM is physically messed up. If its the 2nd, open case, unplug and replug all the cd-rom cables, restart and test again.
If it still doesnt work, your cd-rom is kapput. Perfect excuse to get a DVD