You should be able to use at least a 30gb drive with your old machine.

I still use a Windows 98(fe) machine, PII, 350mhz, and recently replaced the failing 4.5 gb drive with a 2nd hand drive from ebay.

While I have Drive Image,Ghost,Paragon etc I just used Maxblast the utility for maxtor drives to format and copy the old drive over to the new and set the new to be the bootable master.

Then swapped the new drive for the old, simple, and the new drive is silent as opposed to the squealing/grinding noise the old had started to make !