Install Windows 98 first. Upon installation, Windows XP will prepare a boot menu with two entries: one for 98 and one for itself.

I use this way (NTLDR + Win98's bootsect), each OS thinks it's installed on drive C:.

Indeed it's easier to first install Win9x, then XP. Because XP recognizes Win9x automatically, but not the other way around. Win98 will probably trash the XP boot sector.
If you don't want to wipe the existing install, there are ways to fix / work around it. I've documented some of them here.
ott's suggestion has its own advantages, I would try that first, if you already have WinXP installed.

I did just that not long ago on a laptop.
I used this tool to reduce the size of the XP partition after defragmenting it. It was freely downloadable from https://web.archive.org/web/20160310034551/ht … m/download.html

And it's mirrored at https://archive.org/details/minitool_partitio … ee_edition_v9.1

Installed Win98se, then you have the choice of installing BeOS Personal Edition under Win98 (if your hardware is supported) and install bootman (the BeOS bootmenu) from the Terminal.
Or boot from a Haiku livecd and install its bootmenu.
It will show one entry per partition and will works flawlessly.

If I wanted to install Win98SE first, how would I format the existing WinXP installation?

I used to be able to do this stuff but it’s been so many years…

The Windows XP partition can be formatted from a Windows 98 boot disk. Navigate to the installation medium and run "extract ebd.cab format.com"; this will make the format command accessible. Formatting the partition from a later Windows installation medium is also an option.

GemCookie wrote on Today, 15:13:

Formatting the partition from a later Windows installation medium is also an option.

Would you say it’s easier from WinXP’s disk?

AndreaColombo86 wrote on Today, 17:54:

Would you say it’s easier from WinXP’s disk?

The Windows XP installer is more likely to allow a quick format.