If you can get dos 6.x installed, then try this (this works to make a new hard drive into a clone of a win98 machine, haven't tried it on vmware yet):
1. Place a usb drive on the win98 machine and do this in a command window:
copy c:\ g:\ /s /e /c /i /h /r /k/y
change g: to whatever the usb drive is.
2. Move the drive so it is visible to the vmware dos image and try
copy g:\ c:\ /s /e /c /i /h /r /k/y
again g: may be something else.