Actually, installing it to hard disk will likely make it buggy and unstable, and even more so if you ever add software or update anything.Originally Posted by garrincha
Already having available space on an unformatted partition is a good start to install Linux. But since you indicate that there is a D partition but it is unformatted that implies that the partition has a partition type (likely FAT and not Linux) and that you likely have used all of the disk space for that one remaining but unused D partition.
We also don't know how much space is available for D, which would help us give proper advice.
My suggestion would be to use a DOS/Windows tool like Fdisk to erase the second D partition. As long as you only remove D and not C this will not impact the Windows 98 stuff on C. Then decide how you want to dual boot. If you are willing to do it with Grub then move on to the next step; if you want to use Smart Boot Manager then install it to the MBR now, if you want to use XOSL (like I do) then make a tiny few meg partition and install XOSL there.
Then it's time to install Linux in the remaining available space. I will not take part in any blasphemy of installing Knoppix. DSL might be an OK choice, but unless there are compelling space issues I see no reason to do it. Debian (I would suggest the Net-install of Etch/testing version) should install nicely in the remaining available space, it should offering installing to available space as one of the install options and it would allocate that space properly for both a Linux partition and a swap partition during the install process.