I am running Win Xp Home on a Celeron 900Mhz with 256MB Ram. I have been pondering for sometime as to whether or not to try and upgrade my processor to a Pentium 2 or 3. My first question is can this even be accomplished and if so, where can I find processors at good prices? Thanks for any and all help.

some laptops have processors which are integrated into a board. If that is the case, you have to replace the board.

if your laptop can support it, adding at least another 128 megs of ram is a much cheaper fix, unless you are looking specifically at replacing the celeron with a p3 mobile processor:)

If the celeron is a uPGA/mPGA type processor you should be able to upgrade to a Pentium III. I did this with two laptops that came with a Cel 500mhz, upgraded one to a 600 PIII, the other to a 750 PIII, the first for $45 on Ebay, the second for $75. You'll need to find out what type of package the processor is. Ebay is the only place you can get a cpu to upgrade for a good price. The Pnetium II wouldn't be worth the cost of the upgrade.

Selling on Ebay right now:

900mhz PIII micro-PGA2

Chances are very good your Celeron is an mPGA-2 but I can't guarentee it. 900mhz is probably the highest you can go on an mPGA-2, beyond that I believe they're all FCPGA packages. The buy-it-now is around $150 I think, not bad. One way you might be able to tell what package your Celery is is to take it out and look at the pin array. MPGA-2s will have 4 notches, one on each side. It may even say PGA-2 or mPGa-2 or uPGA-2 on the top.
This seller has two or three of these up for auction right but they won't last very long. Otherwise for less money you could get an 800 PIII but I'd wonder if it'd be worth it since you have a fast Celeron right now.