My suggestion is you install WinME and WinXP on different HD. If you just have one HD, buy a new one.
Then you can use BIOS multi-boot feature to choose whether you want to boot from C: or D: (IDE0 or IDE1).

Install XP on C: and ME on D:. You can use FAT32 for both HD.

For XP, you can boot from CD-ROM using XP CD and install it on C:.

For ME, after made partition for D:. Format it and transfer system files. Then, you copy all the WinME installation files to your D:. Finally, you change the bios setting and boot from D: and start to install WinME.