1. your hard disk (1) only has a c: partition (2)with the exact size 4GiB (4096 MiB), and (3)the other spaces are unallocated
2. boot your pc from (4)win98/me startup disk (ebd) and install (5)98se oem (6)from cd
notice that the two conditions and the (six) key points bold must be true at the same time to meet this bug.
in this case, when file copy progress gets to 48%, the progress will stop about a minute and then setup suddenly prompts that setup cab files error. it looks like the cd is broken or dirty. usually, in most cases, this error will be occurred if your setup cd, cd-rom drive, hard disk, memory, data cable or power supply has problems. but after you solved these, this error still exists. most persons will not think this is a bug in win98se setup, because 95/98fe/me (all versions) and 98se retail versions (full/upgrade) don't have this strange bug. 98se oem en-us version also don't have this bug, but chinese simp/trad version have. I didn't test other language versions. by the way, if the above two conditions don't true at the same time, you can't meet this bug. for example, you boot your pc from 98se oem cd and then run setup.
when this bug occurs, eject win98 cd, and click ok. click browse in the following 'file not found' dialog box, you will see the label of your drive c: is unreadable. sometimes the drive label is ok, but this bug still exists.
the msdn retail version of 98se chinese hk also has this bug in file copy progress 3% when the above conditions are true.

