question is - can it work with the card? do you have the drivers?
theoretically fat32 (win98 doesn't support ntfs unless you install some 3rd party software) can work with up to 32Gb hard disks. that's of course totally wrong, and it's just microsoft's way of not solving fat32 issues with large drives.
anyhow, I'd move on to XP before upgrading
For those who may be interested I used Maxtor's MaxBlast which found and installed my SATA drive. I now have the full capacity of my 160Gb drive running on my Windows 98 SE system - a brillient piece of software.