1. Back up your music files--always!
2. What format are the files in that are on the 98 machine? MP3 or WMA is easy (this is most likely what they'll be in if you ripped them from CDs), just transfer them over to the XP machine once it's back up and running (CD-Rs or EHDDs work best here) and then use iTunes to upload them to your iPod.
3. If you ever plan to reimage your hard drive, deauthorize all the songs on your playlist and then back them up. iTunes will identify your reimaged hard drive as a new computer and you will use up one of your authorization counts (you have 5 per song) when you upload them to the "new" hard drive. If you forget to deauthorize, e-mail Apple and they'll correct it for you.