Oh boy... I haven't done that with Windows 98 in at least 8-9 years.
Couple options...
1. Creating a DOS boot disk with CD-ROM support for that drive. Partition the drive and format it (or simply format the existing partition) with "format /s", then copy the i386 folder to the drive (e.g. copy to C:\i386). Then run setup from within that folder.
If you can find drivers for the CD-ROM, there should be instructions with those drivers for configuring for DOS. Otherwise, there are universal CD-ROM drivers out there as well. e.g.
http://www.bootdisk.com/readme.htm2. If the computer has a network card, you could, alternatively, create a network bootdisk. Put the Windows CD into an optical drive in a computer on the network, and share the drive. With the laptop booted off the network bootdisk, map a drive to the shared optical drive, then run setup.
Either requires some DOS know-how, with configuring drivers and such. There are universal network boot disks out there though. I think this is one that I have used:
http://netbootdisk.com/I usually found that the network bootdisk works out the best, but simply because old machines often have faulty optical drives, and machines of that vintage also often didn't read CD-R or CD-RW media.