One advice..if you can (and if we're talking about IDE drives here), plug the 2nd harddisk to the first IDE cable - if you have your first harddrive on the same cable with a cd/dvd-drive of some kind, unplug the cd/dvd-drive, put your 2nd harddisk instead there, and connect the cd/dvd-drive to the secondary IDE-cable. This is because it seems booting an operating system from a harddisk on a secondary ide cable does not work all right..it might or might not help but try out, at least if you're unable to boot Win98 from the 2nd harddisk after plugging it to a secondary IDE cable. If it's something else than IDE (say scsi), then forget the above.
Your first harddisk is most probably known as "hda" to Linux, and it's partitions hda1, hda2 etc..the second harddisk should pop up as hdb, and it's partitions hdb1 etc. Grub uses a bit different marking method, but if you look at the XP part of your grub's menu.lst you should be able to add your Win98 entry there, imitating the XP entry - just set the partition to boot from be on your second harddisk. If I recall correctly, the first partition on your first harddisk (where XP is probably installed?) is hd(0,1) or something. So your second harddisk's first partition would be hd(1,1) in this case, if I'm right..well, I'm working on a Win2k at the moment so bear me, but that's where I'd start from. The Grub entry for Win98 is quite similar to that of XP's, except you need to change the partition in the entry to point to the 2nd harddisk.