May sound strange to you, but have you considered installing a Linux distro?
Even the best Linux distributions can struggle with todays laptops, due to the often peculiar hardware, but a 4-year old lappy shouldn't be a problem.
Couldn't be worse than your situation (WinME was truly AWFUL) and potentially you'll have a nice quick machine that will do all the usual things one does with laptops exceedingly well.
All the software is FREE and included in the distribution (OpenOffice 2.0 is an Office suite that rivals MSOffice and is 99% compatible)
Consider Ubuntu (my choice) found at
http://www.ubuntulinux.org/download/ or Knoppix at
http://www.knopper.net/knoppix/index-en.html
If my wife's XP lappy gives trouble again then I'll put Ubuntu on it.