Karen,
Since you use dialup, I'm not too worried about telling you this, however, should you upgrade to cable, satellite, or DSL, then you may have to change how this is done slightly.
If you do go to cable, satellite, or DSL, this will still work it's just that you will want to install a hardware router/firewall and let the IP addressing come from the hardware.
In addition to making sure they are both in the same workgroup, you will need to assign an IP address and Subnet mask to each machine. I've done this a few time to personal networks and it usually works out pretty good.
1. Each computer must have a unique computer name (Computer1 and Computer 2 for example)
2. Each computer must have the same workgroup (Workgroup for example)
3. On the XP machine you will open Right click on My Network Places and click on Properties.
4.In the window you should see and icon that says LAN or Local Area Network. Right click on this LAN icon and click on properties.
5. In the white box, find and highlight the Internet Protocol (TCP/IP) then click on the Properties button.
6. Normally this is defaulted to Obtain and IP address automatically. In this case we are going to select specify an IP address.
7. In the IP address area put in 192.168.10.1
8. In the subnet mask area put in 255.255.255.0
9. Every thing else you can leave blank in this example. If this were a network with a firewall/router, you put the IP address of the router (also note that the IP addresses and subnetmask information would also be different from this example).
10. Click OK
11. Click OK again. Typically you do not have to reboot after this, but it is always a good safe measure.
Now, on the Windows 98 machine...
1. Right click on Network Neighborhood and click on Properties
2. On the Configuration tab in the large white box you need to make sure that you have the following:
Client for Microsoft Networks
A network card of some kind
TCP/IP for your network card
If you do not see at least these 3 things, then you have another problem which can be addressed later.
3. Highlight the TCP/IP for your network card and then click on Properties.
4. On the IP Address tab (usually what the window opens up at), Select Specify an IP address.
5. For the IP address enter 192.168.10.2
6. For the Subnet mask enter 255.255.255.0
7. Click OK
8. Click OK again
9. You should then be prompted to reboot the system
After both systems have been rebooted.....
On the Windows 98 machine...
Open Network Neighborhood
You should see Entire Network and both computer names
If you only see Entire Network, then double click on Entire network. If it gives you and error that stats "Unable to browse the network", then you have different problem.
On the Windows XP machine...
Open My Network Places
Click on the Search icon on the toolbar (magnifying glass)
You may have to select that you want to search for a computer on the network, then entr the computer name of the windows 98 computer. If it doesn't find it then we have more troubleshooting to do.
This is a good chunk of info so I will stop here and wait to see your progress.