hi
what im talking about is to install the OS in there respective ideal partitions formats, in 98 will be FAT32 and in NT will be NTFS, with this u will have the maximum performance. the FAT16 128mb partition its only for nt to work, there not supposed to be nothing in there, in fact could be smaller, like 64mb. My idea of a ideal partition with those OS is , the C: in FAT16 with 128mb, a D: partition with 98 in FAT32, this could be 2 or 3 GB, depends on u, and a E: partition with NTFS, for windows NT. I know that in NT u couldn see the Fat32 partition and the same happens in 98, but there ar some apps that u could get that read fat32 in NT and NTFS in 98.
hope this helps u 
Gonzalo Storni
PD: remember that fat16 only supports 2gb maximum and the cluster are damn big..ur disk will fill faster rather than in NFTS or FAT32