Windows XP runs more app then windows ME, 64mb DDR, will be very slow for windows XP.
if you want to do a fresh install and avoid future problems like registry interupts and memory dump, windows ME has a shorter set of refistry keys, so when you upgrade to XP the programe will add new registry to your old set, however if your old set of keys are modified or updated they will cause system interupts , wich will need much more memory to solve, and if memory is low, your PC will crash, and needs to dump memory.
it is better to format your main drive and install a fresh copy, however, if you want to save data, without using extarnal media, this is a way to do it:
if your system has been partitioned before, backup your files in the partitioned area, if not use a software called (partition magic), to partition your hard drive into two drives, back up your data in the new partitioned part and format your main drive C: that has the windows files, and install a new copy of WinXP in the same drive c: then you'll have a new fresh copy of windows XP on your C:, and your old files in the partitioned area lets say drive Dl..
for better preformance from WinXP upgrade your RAM to 512, your CPU is an K7 AMD, they are very powerfull and can give reasnoble preformance for your everyday use as explained, but the main memory 64mb, is very slow for XP, a 128 is the lowest system requirments..
hope that was helpfull.....