Not sure what your particular problem is John but I must say that I've found XP far more reliable than ME. I had ME on my previous m/c and had to reinstall it several times - all due to Norton AV which I'd never touch again, it's wasted so much time for me.
I've read this elsewhere about reinstalling Windows to make it run quicker - I'm not convinced, since it takes so long to do, and it's something I fortunately haven't been forced to do in the 2 years since I got this m/c. It's possible to tidy things up as you go along eg stop all those programs that you don't really want from starting automatically when you turn the m/c on.
I backup regularly to an external hard drive - I actually use a progam which I've written to do this which makes it a lot easier, but it should be fairly easy to copy across the important folders manually. I also run the Windows backup program which you have to install yourself, it doesn't come as part of XP.
I've scrapped ME on my old m/c and have got a version of Linux called Kubuntu running on it. It's pretty good but I haven't worked out how to get it to connect to the internet yet - this isn't only due to the fact that I haven't got a cable running into the room it's in