I've never had good luck with windows 98 second edition. I find it more bug prone and performance lossy than the first release.
If you can get your hands on the "first" edition, I would use it along with 98lite.
You can check it out here:
www.98lite.net
It's cheap and worth the register.
Also, If your using your machine for more than just recording app's, consider using a boot manager and a dual boot setup - one for recording, and the other for anything else.
www.masterbooter.com
Installing your software on a second drive won't help, as registry entries are made on your primary drive, and the performance of your machine will always be based how well windows is currently running on that drive. The more junk installed, the more bogged down windows will get, and eventually self destruct.
But, having a second drive that you use only for audio data, i.e. wav files is a good idea. - 7200RPM, preferably Quantum or IBM.
[This message has been edited by Emeric (edited 06-21-2000).]