If you want to buy another computer, your task of copying files might be easier. No need to buy USB hard disk if you network your old pc and the new pc (you might have to buy cables, etc). Now, you have 2 pc's that are netowrked. Might as well took advantage of that old pc. Then just transfer the files over the network. I also use windows 98 se, so I know this works.

BTW, hard drives are cheap nowadays. At Fry's, one can buy large HD for $50 or under. But you have to know how to install the HD.

If this is too hard for you then maybe the USB drive is a good idea.

I also saw Emachines at Best Buy complete with monitor, printer for like $300. It's probably enough for most people. It's enough for me for many years. Computers go obsolete every 2 years anyway. Why buy expensive models. I always choose the cheap but good solution and it has worked well for me over the years.