Patriach, I notice that the reason you want ME is so that you can run older games for the kids.
Why don't you just install the games, right click on the desktop icon of the newly installed game, or right click on the game launch icon in the start>accessories list, select compatibilty, and change the compatibility so that the games open up as either, 95, 98, ME, NT or 2000 programs, instead of XP? It's that easy!
On the subject of dual booting, you need to install ME FIRST, then you have to reinstall XP, reagradless of whether it's on another drive. If you install XP first, the ME install won't overwrite the ini files so that ME can run, because the XP ini files are superior.
If you install ME first, the ini files get loaded, then when you install XP onto another drive or partition, it just ADDS the newer ini files for XP, therefore you can now run both.
One thing though, ME doesn't support NTFS, so if you are using NTFS with XP, you might have some problems with compression and sharing files, in which case you might find that your file system reverts back to FAT16.
I hope this helps