How about just sticking the old 60 GB hard drive in, as a Single master. Shouldn't that work, eventually? When you boot it up it'll prolly go nuts noticing all the new hardware and everything, but once new drivers are picked, won't it run ME just like it did in the Compaq? I've done it with Linux RedHat, I'm not sure if it would work the same in Windows or not.
The point being you can get the important information off using CD-r or floppy, and then worry about something more permanent.
Also, why is it you want to convert to NTFS? WinXP can read Fat32 just fine, or is that "RAW" thing you mentioned keeping you from reading it?