Message SU0168 in Setup

After this computer freezes, I ran setup at the DOS prompt and got the error message”Your computer already has an operating system installed, which cannot be upgraded by this version of setup. You need to obtain the Windows 98 upgrade.”
This is nonsense, as Windows can be reinstalled by running setup. Antivirus is disabled in BIOS. Win98 version 1, AMD K6/2 processor on PC Chips motherboard.