[harry12]

It may seem silly to ask, but what is it you want to do - why are you specifying this 1G USB drive?
Win98 probably won't see that USB drive as you've been told - and Pip22 as always... other fixes are sound...but why not attach a spare IDE-drive to the IDE cable (of the old computer) plus power connecter and transfer the files over. Before USB that was the chore we did without a thought....then as suggested take the (transfer HDD) to a new PC with USB capability and transfer the files.
I would be reluctant to remove the working HDD from the Win98 PC, if there is an alternative.... ( such as an old HDD to act as transfer.)

However, the real issue may be the Win98-Driver - for Win98 should address USB (provided you can get a suitable driver and motherboard has the port/bios etc.)... as it was largely the problems with USB that killed-off Win95 - the third version of that was supposed to work USB but I have never found anyone that achieved it...I have a Win95 CD "With USB support" - does it? - not likely........Grr.
As soon as Win98SE came out, all new drivers were issued as SE-versions since this also fixed other issues HDD capacity etc which suddenly became an issue when the PC went photographic.
Hope that helps.