Temps with the stock heatsink/fan? probably not very good - Intel claims anything below about 60 C is normal with their HSF.
As for the operating system, if your CPU is overclocked to a point where it is not stable, you could possibly get errors which will crash your rig when you are installing it. Unless you're trying to install some weird **** like a 64 bit operating system on your system, it should work without a hitch.
To add a little onto what runsalone said, if you are trying to install any OS onto an overclocked system, start by returning the system to the default settings.
Sometimes Win98 does not want to install through the auto install (the blue screen with DOS wizards) system. If this is what's happening, escape out of the Wizard to the DOS screen and follow these steps to manually install the os:
1) Run FDISK to set the boot partition. From the DOS screen (and with your Win98 CD in the drive, you don't need to use a boot floppy) type "D: FDISK" Create the boot sector on your hard drive and reboot with the Win98 CD still in the drive.
2) Go back to the DOS screen and enter "D: FORMAT C:/S" This will format your hard drive and designate it as the OS drive. You have to include the "/S" or you will not be able to install Windows.
3) After the drive is formatted, return to the DOS screen (no reboot required) and enter "D: SETUP" Allow the setup to run the diagnostic programs it needs (Scandisk) and after that's done it will take you into the Windows installation program.
Last note: If the installer is crashing in this part of the program when Windows is searching for hardware and other devices, you might have a bad motherboard. I've had a couple of VIA memory controllers die on Athlon boards, and I couldn't get through the search for hardware without BSOD's.