win98/winxp on partition drive

I have a 40gb hard drive and I have set it 50/50 and installed windows-98 on the primary side of the drive, then when I go to install windows-xp on the extended drive. Should I use FAT or NTFS for the xp, also should I have any conflicts between them. I have a hard drive with win98 and win2000pro and I have no problems out of it. On the hard drive with win98 and winxp the first time I did the win98 would not load the kernal system. Any help or ideas would be great.