1st, Notebook need to support usb boot, if not, no need to read below
2nd, your usb drive need to support the boot sequence, also it can power up and active once it is plug to the usb port,
3rd, Win98 not supporting usb boot, so you need to replace the win98 harddisk in your notebook as primary hardisk and perform install.
4, complete all the above tasks and you may have a choice to use external OS win98
5, easier way is USB Drive, big enough to store OS and many new notebook support the USB Drive as boot Key