After backing up your data, I'd go ahead and do the Win 2k upgrade. Win 2k is very different from ME (and astronomically better in my opinion). Convert your file system to NTFS and upgrade any drivers or programs that it complains about - it will dothis for you during installation. If the problems persist, fdisk and put your data files back after a clean install. Normally I wouldn't suggest this, but I just upgraded a laptop at the weekend and figured afterwards I would end up fdisking and starting from scratch, but the upgrade worked perfectly (far better than I would have expected) and the laptop is running better than it ever did under Win ME (not really a surprise. Me sucks).
So, I'd be prepared to start fresh if required. Have good backups and make SURE to write down your hardware devices/config and have drivers available. Then do the upgrade. Since this is an NT based OS and not 9x, the change is significant. The performance and reliability improvment is too.
Good Luck