John - I've just built a brand new PC and loaded Win98SE on it - it's a good stable operating system with very few compatibility problems for most users.

Most bootable CDs (including the Win98SE install one) have their own special version of the MSCDEX routine which allows a drive letter to be assigned to a CD drive. A win9x boot floppy disk should also contain the support for a CD drive. If the BIOS setup includes CD Drive in it's boot sequence settings it should be possible to boot from it providing it is enabled in those settings, has been detected by the BIOS, and is workin OK.