I had a 2001 Compaq with Windows Me. Loved the computer, hated the operating system. Windows Me is a terrible OS. It was all the time freezing up on me. It had alot of compatibility issues. And when I tried to upgrade to XP it ran into further compatibility issues (those nasty blue screen errors) concerning the onboard graphics card, which wouldn't allow me to upgrade. I found a copy of Win 98 SE and installed it.
You need more SD RAM for sure, and that is the cheaper route to try first. I'd shot for a minimum of 128 MB to start out. I get mine from here....
But even before you do that, try this.....
Do you run any spyware program? It could be spyware is part of your problem.
Here are a couple that alot of people use....
Ad-Aware (free) http://www.download.com/3000-2144-10045910.html
Spy Sweeper http://www.webroot.com/consumer
When is the last time you've done a disk cleanup and/or ran your disk defragmenter? Go to "Start-Programs-Acessories - System Tools" to find them.
Having open programs running in the background will cause slowness and/or hanging up.
Go to "Start" then "Run", and type in "msconfig". This will bring up the "System Configuration Utility". Click on the Startup tab and take a look at the list.
The following is a list of things in Startup that you should not uncheck
and leave running...
* LoadPowerProfile (both of them)
As well as those that pertain to your anti-virus software.
Here is an article on that....