Citizen David Parfitt ... comparing the 2 OSs.....ME and XP....you have opposite ends of the functional scale.
ME is arguably the worst operating system ever devised by MS....if it were still being developed it 'might' almost be safe to release in a few years...
XP on the other hand is usually argued as either better than, or as good as Win 2000....one or the other being the best MS OS ever.
I found thar 2000 had issues with device drivers, where XP did not....so for me XP is best.
Your best bet is to install XP...though you will need a bit more ram.....256 isn't really sufficient....