Bochs (an open source emulator) has been already compiled for PSP, and has been shown that even the 32MB of a PSP is enough to boot a simple image (yes-you need an image of a pre-installed OS on a PC) .. a simple image like FreeDOS. But, I do not think Win98-2k would be fast enough coz' emulators slow everything down not to mention that more than 50% of our RAM is occupied right after booting, plus add the emulator and your image...
btw how much mem does win occupy after booting...? so, maybe DOS....