Windows\options\cabs

You have 2 ways to install win98, both will need a boot floppy to get a dos prompt.

Method 1 ( which is what I think your refering to )
To make a c:\windows\options\cabs dir to copy the files from the win98 CD to the HD so using the HD to install win98

boot using boot floppy and follow this to create the folder location,

a:\> c:

c:>md windows

c:>cd windows (or simply type cd followed by the F3 key)

c:\windows>md options

c:\windows>cd options

c:\windows\options>md cabs

c:\windows\options>cd cabs

c:\windows\options\cabs>copy d:\win98\*.*
( where D is your CD drive )

then to install win98 from the dos prompt type c:\windows\options\cabs>setup /ie

Method 2
This is booting to the floppy and installing from the win98 cd directly

a:\> d:

where d: is your CD drive letter

d:\> cd win98

d:\win98 > setup /ie