Desktop

Reads as though your hard drive is formatted with NTFS which is still being recognized in the CMOS.
Start computer,at start up hit shift+F4,at the command prompt input FDISK and wipe the hard drive clean and delete all partitions per the on screen instructions.
It would be less difficult if you were to have partition magic available.
Back up data if its an option.
Reformat the hd by using the set up disk and
cd.

The fact that you have '98 installed tells me c: is a fat partition, if you're trying to write to another drive (d:) and it's NTFS from the NT install, '98 it won't be able to read it and you'll need to reformat THAT(d:) drive as fat. If you've onlygot the single partition the problem is probably your hard drive.Both SEAGATE and MAXTOR (if your drive isn't one of these check your drive's site)
(http://www.seagate.com/products/index.html
http://www.maxtor.com/MaxtorHome.htm)
sites have utilites in their download sections to assist you with mapping out bad sectors. Make sure to backup your hard drive first. These utilites will perform a DESTRUCTIVE READ WRITE test to rectify your problem.

Well indeed you are at the state of loosing your data. That's because of NTFS system, that 've been damaged by win98. The best thing to do is to boot (Start) from a startup disk or CD (if that option is available at BIOS setup). Then you'll get the chance to enter setup or exit setup & perform a Fdisk operation wipping out any available partition and data together.
If you have any needed data then after the boot, try to access your c: drive and move to the directory you need to backup. If you have any file larger than 1.38 MB to copy it to Floppies, you must use an old-fashion-way to compress your files (Pkzip v2.xx, Arj v2.xx or other DOS utility such as RAR, Pack etc) and activate a buildin disk spanning.
Then proceed to Fdisk deletingthe partition (non-DOS partition), and recreate one for FAT32.
Hope Helps
Sakis Samaras
PS
When you open Fdisk you 'll be prompted to activate FAT32; answer "Y"es to the question, so that you 'll be enabled to access Hard Disk with storage morethan 528 MB.

This behavior can occur if you have a Linksys EtherFast 10/100 network adapter
in your computer. The EtherFast network adapter can cause a resource conflict
with Windows 98 PCI Steering.

I'm not posting the entire text because of the 1000 character limitation of this forum

http://support.microsoft.com/support/kb/articles/Q192/8/44.asp

If all else fails. Does your laptop have some sort of warranty? Contact the vendor to see about getting a replacement hard drive. With my dell laptop, they usually have a replacement part out to me the next day. You would have to re-install yourOS and any other applications, and you would have to find a way to back up any files that you want to keep from your other drive. But if your drive has bad sectors, and it's only three months old, I might look into getting a new one.

I hope thishelps.