I was getting the same garbage messages.
I am using a 128mb card.
I have 98lite, touchscreen, Winamp Lite, Office 97, IE 6 all crammed on there.
Here's how I created my image:
Hook up a laptop hard drive to the Gateway with a special IDE cable from BigDog (I think).
Install 98Lite and compress it waaaay down.
Now pop that drive into a desktop pc and create an image using whatever image software you prefer.
(I used Norton Ghost).
Next take a CF card and put it in the USB CF reader on your WinME machine.
Run Ranish in a command prompt window.
It should see the CF Card as a drive.
Format the card FAT16 NOT FAT32
Set the Primary partition to ACTIVE and set the boot flag to PARTITION 1
Ranish has this setting somewhere. Read thru Ranish settings carefully.
Next, write your image to the CF Card using your image writing software.
(I used Norton Ghost Explorer and just copy-pasted the files from the image onto the CF card).
Now pop the CF card in you Gateway and turn it on.
It should boot to 98Lite.