I don't know this "Ranish manager" but when the 98SE setup complains about a NT based file, maybe that thing doesn't work properly. I did multiple 98SE installations on drives that were NTFS before and never had such a headache as you describe. I always use the normal fdisk from microsoft that is on the 98SE installation cd (and on the boot floppy if you have one), first remove all partitions including the "non DOS" ones, then make a primary DOS partition and activate it (to make it bootable), then exit fdisk and restart. Even if it does not get the disk size right, it worked every time for me. Now you can decide to copy the 98SE setup files to your harddisk (so you don't have to put in the 98SE cd every time you install a driver etc) or you can start the setup right away.
The installation "manual" by Tweakstone that GAT mentioned before is really helpful with the installation process, but its in german. I'm going with his recommendation and use the unofficial SP2.1e, there is a newer SP3.x, but I never tried that.