I had a carefully crafted 98SE CD that was created using a tool called (I think) 98lite. It let you remove components and set defaults. That was rock solid for me, and used so few resources. Boot times were very quick considering the hardware at the time. The all-important post-install defrag made a difference.

I didn't switch away from 98SE on my home computer until XP SP2 (which I immediately theme to look like 98 because I hated the primary colour nonsense).

Actually, every Windows installation from then until I switched to Linux was "shrunk" and tweaked (can't remember what tool I used, but it wasn't an official MS thing). Having a full licenced copy of InstallShield at work was extremely handy too - every app was repackaged into a fully automatic installer and bundled with the OS. It almost felt like a cloned PC. In fact when I got a job managing fleets of PCs, that XPCD Builder script was like a superpower.