Hey KP, don't give up the ship (yet :-))!
I'm a Canon tech, and have had many installs like this. Most of the time it can be made to work. Whether or not this is desirable, is entirely up to you, lol!
First, determine which version win98 is being used; 98 or 98SE.
If 98, either find a copy of 98SE, or upgrade PC.
Second, determine if the USB port on the PC is an add-on USB card or motherboard based.
If an add-on, go to mfgrs. site and see if drivers are available.
If motherboard based, go to PC mfgrs. (Compaq?) site and look for chipset and/or USB drivers for that model. You may need to do a BIOS upgrade; however doing that is generally painfull, and a new PC would be a better bet. Check Microsoft's site for the latest (last?) USB drivers for win98.
Getting the USB situation squared away should allow the install to complete.
All of the above being said, is this printer being installed on a single PC, or a network? Most Canons have more than one connection option, and will perform best using the network option if available.
Rather than boring our FRiends any further, Freep-mail me and we can figger sumptin out!