OK... I fixed it, and since others would like a easy fix for this, I created them for you guys.
This is IBM Thinkpad 600E, that has NO floppy drive and a DEAD battery.
I created a .iso that is a 98SE Bootdisk CDRom (corrected for this purpose.) It also has the files for the Bios Update.
1.) Hold F1 when the laptop is booting up and enter the BIOS menu, under Config -> Network, Enable the Flash option. And Restart.
2.)Download this (Right Click - Save As:) - http://www.files.bz/files/4073/Win98SE.mp3
(i had used a free file hosting site that only allows certain files... so, RENAME Win98SE.mp3 to Win98SE.iso)
3.)Burn the ISO (I used Nero - Nero Burning Rom>>>Recorder>>>Burn Image)
4.)Start up your IBM 600E, with this CD in. The choose the 1st choice. And when it's done... you will have a A: prompt
5.)Type - "D:" (without the quotes)
6.)Type - "flash2.exe /u" (without the quotes)
7.)Update is completing and just restart
8.)Now install XP
I hope this makes it easier for everyone because it kicked my a$$. I spent 10 hours trying to get this right... SHOW SOME LOVE!!!!!