i would suggest setting the hard drive(s) (presumably primary master for the OS hard drive) to UDMA mode in BIOS. do it manually, don't rely on restoring BIOS defaults. make sure the hard drives are on UDMA mode.
after getting into windows, go to the device manager, and make sure DMA is on for the hard drive(s). i think in win98 this means goint into the device manager (right click on my computer -> properties -> device manager tab) and double click on the hard drive(s) listed there (i'm not sure about these instructions, i don't have win98. if they are'nt exactly right, play around with the stuff till you find it). you should see a checkbox marked DMA or Direct Memory Access or something like that, make sure it is on for the hard drives.
your mistake was to switch to PIO mode not for the CDRW drive only but for the hard drive too, big mistake...
by the way:
questions like these should probably go to the General Hardware forum, not here. and most definitely, don't post multiple times, please.
One Ring to rule them all, One Ring to find them,
One Ring to bring them all and in the darkness bind them
In the land of Mordor, where the Shadows lie
M.C. Escher - Reptilien