Most likely XP will work on your box. It doesn't have too high a minimum system requirements and even works on my old Thinkpad. Given a choice between the two it is a no-brainer - XP is much more stable, feature rich, and easier to use than ME.

However, check your system against the minimum system requirements or download the system compatibility applet at http://www.microsoft.com/windowsxp/pro/howtobuy/upgrading/advisor.asp