As far as I remember Win98 disks are not bootable.
You need to boot from a win98 floppy and start install from that.
Once you booted up in DOS you can always point to run the setup.exe from the Win98 files copyed on your HD.
And as far as copying is concerned, just use CD copy in your burner software.
In case of a damaged original as you have, most burning software give you the option to first write a immage to your HD and use that immage to copy your disk.

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