The reason you're having problems with the system asking for you to repeatedly insert the Windows CD is you initially installed Windows off the CD. Instead you should've installed it from the hard drive.
After FDISKing and FORMATing, I make a folder on C: called "Win98.cd" and copy all the .cab files from the CD (x:\win98\) into it. (x: = CD-ROM) Then you run "setup.exe" from C:\Win98.cd.
But you can fix this. First, create the folder on C: and copy the files from x:\win98\ into it. Then with Regedit, find the key:
HKEY_LOCAL_MACHINE\Software\Microsoft\Windows\CurrentVersion\Setup
Look for "Source Path" under Name, and under Data you'll see the location where you installed Windows from on your CD - x:\win98\. Right_click "Source Path" select Modify and enter the new location of the .cab files - C:\Win98.cd. Now, whenever Windoze needs to update something it will just pluck it off the hard drive instead of nagging you for the CD.