I've recently been working on setting up a FreeDOS(98) image to the point where it can run Touhou without any issues. I believe that the issues I have been having with FreeDOS(98) all have to do with the FDXMS.SYS driver. Below is a quote from the Wikipedia page on FreeDOS:
QuoteThe disk cache stores recently accessed disk data in XMS for faster access and less direct disk access.
This means that, by default, FreeDOS is putting portions of the HDD into RAM for quicker access. By doing this, I believe it is breaking compatibility with PC-98 DOS programs. Below is an issue I am having with the original Corpse Party game that I believe is being caused by the XMS driver:
(http://i.imgur.com/NczexlJ.png)
Also, I tried changing the RAM settings in the BIOS and, upon reboot, FreeDOS appeared to start fine. But when it tried to load the XMS driver, the screen was filled with random flashing and patterns. The PC-98 then locked up and would not boot properly until I changed the RAM settings back to the "1 MB" option.
So, I'll try removing the FDXMS driver from the image and rewire CONFIG.SYS to use EMM386 instead; this should eliminate the "Abort, Retry, Fail" and "ERROR DRIVE C" issues. In the meantime, I am trying to track down MS-DOS 6.2 or MS-DOS 5.0 on Yahoo Auctions in case I am unable to get FreeDOS(98) working.