The problem is NOT the OS, the problem is…the floppy drive!
Probably your new PC has no floppy drive.
For more details refer to:
There you can read:
“When the Setup Wizard begins, a system configuration file is read. If the devices listed in the configuration file cannot be located, the error occurs and the Setup Wizard terminates.”
I’ve had the same problem using VB4 on XP, and, after reading that article, I connected an USB floppy drive and now it works!
You can also use a Virtual Foppy Drive (like http://chitchat.at.infoseek.co.jp/vmware/vfd.html), but you must assign a drive letter (A: or B:) to the virtual device!
All VB6 tools work fine on Windows XP.
As an alternative, you could virtualize your Win 98 machine, and run it on your XP box.