Hey, first of all, Welcome.
Second of all. May I ask you how you formatted?
I have a horrible feeling that because Windows XP was installed before, you've re-formatted it with the NTFS standard of compression, since Windows XP can use this fine (Just the way it handles data)
Windows before that though needs FAT32 (the standard type) to run, and this includes ME. You may find it can't run because it isn't seeing the right kind of formatted disc to install.
Is there an option to re-format from within the Windows ME disk?
I hope this helps