OMF 2097 does not play happily w/WinXP.
On the positive side, I'm beta testing the new One Must Fall:Battlegrounds. It looks like it will be a winner. Check www.omf.com
for more info.
For OMF 2097, dual boot w/Win98 works best. Just make sure your BIOS says "No" to PnP OS. That option won't affect thing in WinXP. IMHO, the best way to dual boot (if your system supports it, as your specs suggest it does) is to add an inexpensive hard drive and install Win98 on that. Then, use your BIOS to select your boot drive. That way, you don't add any unnecessary partition managing programs that might interfere w/maintenance or create other issues. Also, if your WinXP drives are NTFS formatted, Win98 won't see them. That might boost the the security of the WinXP drives when you are booted up under Win98.
If you don't own Win98, see if you can buy an old copy cheap, or become a criminal and copy and install a disk from a buddy. Something tells me that MS won't raise too great of a fuss if you have a legal version of WinXP and are installing Win98 on the same computer solely to assure compatibility w/old programs. Of course, if I'm wrong, MS finds out what you've done, and you are sent to prison, please don't send me nasty emails from your jail cell