You can use the upgrade CD. run the Compatibility tool first, and uninstall any programs or drivers which the check rejects before performing the upgrade.
Another alternative is to add another hard drive to the system as a 'Slave' drive. Boot from the Windows Upgrade CD and you will get the option to install XP to the second drive, creating a 'Dual-boot' setup. You'll be able to access both your old Windows Me installation and the new Windows XP one.
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Grandad
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