I have a Dell Inspiron 7500 running win 98 2nd and would like to upgrade it to WinXP Sp 2 if possible and would like to know how to do this?

   I am not familiar with the Dell Inspiron 7500, what CPU, how much RAM, what size harddrive.  WinXP does have minimum requirements for CPU, RAM, and free drive space.  Those are the only things that would keep you from being able to upgrade.  So check them out before buying WinXP.
   Be sure to purchase a version of WinXP that allows upgrading.  Some only allow installation as a new system (you do not want this).  It should tell you this on the package.
   To upgrade put the WinXP CD which you purchased in the CD drive and it will tell you what to do from there.  It should take all of the settings from Win98 and put them in WinXP so that you do not lose anything.

I don't know about putting XP on a laptop but I did install Windows XP on a Dell Dimension desktop and the install was basically successful.  There is a website that explains in great detail how to go about this and what you will need to think about (in terms of system resources) before taking on this task.  

http://www.winsupersite.com/showcase/windowsxp_sg_clean.asp

You can also go to Dell's forums where there are a number of threads that cover upgrading Dell machines to XP.  Dell generally does not 'support' the upgrade (i.e. with BIOS upgrades, etc.).  They say this is because of the many issues with all of the software and hardware changes required when going from 9x to XP.

As you will see if your read through all of the linked material, the best way (the only way?) to do this successfully is with a clean install on a clean drive.  In my case I bought a new drive and installed XP on it keeping my 98 OS on its original drive.  You will need to reinstall every item of software on the new OS.  You MUST have not less than 512MB of RAM for XP to run reasonably fast.  On my system XP runs just a fast as 98 except that bootup takes a little longer.  Also, if this is not at least a P3, I would advise waiting to get a Vista laptop next year.  

   I would try upgrading to WinXP first.  It may just work.  If it works, you will not have to reinstall all of your programs.  It will save you from the great hassle of reinstalling everything and possibly losing your data.