virtualbox.org

I'm trying to boot from a Windows 98 SE boot disk in the VM but I'm having issues where when it stops reading the disk, the machine hangs with a blank screen and I can't figure out what's going on.

To start with, try reducing the amount of RAM assigned to the VM. 512Mb is more than Windows 98 can use easily. (Theoretically it should work; in practice it gives problems.) Give it less that 64Mb. You may be able to increase it later once a decent video driver is installed.

Having said this, I have had problems myself booting the Win98 floppy on some machines. I have found the simplest solution is to use instead a boot floppy from Windows 95 OSR2. You only need it to partition and format the hard disk. (Make sure you enable Large hard disks - it is not the default.) Once this is done, copy the files from the Windows 98 CD to a directory on the hard disk and run SETUP from there.

Note that you cannot use a floppy from the first release of Windows 95, unless you want to confine yourself to a hard disk of less that 512Mb.