|This has nothing to do with the computer's BIOS.|
The error "operating system missing" cannot be cured by any function in the BIOS. Nor is access to the BIOS required in order to install or reinstall Windows ME.
You require a Windows ME installation CD. A full installation CD will wipe the entire hard disk. An upgrade installation CD will only wipe the Windows directory.
If you suspect that the computer has a broken Windows ME system on it, you can boot the CD from a bootable Windows ME floppy disk, to load DOS, and then examine the C: drive in DOS, to determine the extent of the damage to the operating system.
In that latter case, it is difficult to know how to proceed with a repair until the extent of the damage is known. You might simply have a missing COMMAND.COM or IO.SYS (hidden files in the C:\ root and C:\Windows\Command directories), capable of repair from DOS by a SYS C: command. Or you might have more extensive damage.
You will also discover whether the data files on the C: drive are still intact. Are you even trying to recover data files from this machine? Obviously, if you are not then doing a Windows reinstall is the easier option.
In any event, all datafiles are potentially recoverable in DOS mode, by attaching the laptop to another computer by cable, and copying the files to that other computer (e.g. using the DOS program interlink or a third-party non-Microsoft program).