|So the only working boot device is the hard drive?|
One method with ME is to remove the drive and attach it to another 98 or ME computer. Make it bootable with the SYS X: command, where X: is it's drive letter in the second computer. Then copy the contents of the WIN9x folder on the ME cd to a folder on the hard drive.
Put the hard drive back in the original laptop and boot it up. At the C:\> prompt change to the folder containing the setup files and run setup.
That's just a general overview. The exact steps are a little more complicated. You probably need an adapter to attach the laptop drive to a desktop as I doubt another laptop can accomodate 2 hard drives. You'll need to know a few dos commands. And, I've never done it that way using an XP computer or even installing XP that way so I can't be of help there.