Your batting two for two now! Thanks for helping us windows 98 users out. I will add to your post.
After you install the updater, you might not notice that it actually installed. After it runs it's course, the setup might just close all by itself and you'd think that you just installed 2.01 onto your iPod. However, it gets installed on to your computer. If the setup didn't ask, or tell you where the updater got installed, go to Start -> Find -> Files or Folders. Search for updater.exe.
If you have multiple drives like I do, search each one till you find it. For example, I found updater.exe in my "E" drive. (I have A - H hard drives). Once you find it, double click on the icon (make sure the ipod is connected to your computer of course) and the install will begin. It takes a few minutes. I also had to get my win98 CD to install something. When this happened, the ipod disconnected itself from my computer (which freaked me out because it was halfway through the install). I just put the win98 cd in and clicked "ok" and the the ipod reconnected itself and the install went through.
The Play list upgrade is oh so great! No more clicking in between songs!
Thanks again ibons