coderunner,
I agree with others that W2K is a much better OS than Win ME in terms of stability and proper utilization of system resources. However, if you are going to go with W2K you should make a resolution to learn about three special facets of the OS that are totally different than the Win9X systems you've used before -- recovery, security and services. Too many people get snagged by one or the other, and either set of features can whack you.
W2K actually has a far better file system (NTFS) available to it than Win9X or Win ME, and I highly recommend that you use it, though you can stick with FAT32. But you have to learn about Emergency Recovery Disks, the Recovery Console, Repair Installations, Parallel Installations, etc. to make it possible to recover problem partitions (and the data on them). There are some who would tell you that FAT32 is better because it enables you to use DOS utilities for file and partition recovery. They only think so because they don't know how robust the recovery tools for W2K are (when used by someone who knows them).
Insofar as security is concerned, just make up your mind to do some real homework on this subject BEFORE you start fiddling with any of W2K's security features. The OS is fully capable of rendering your data inaccessible to you (and anyone else) via improperly applied security features.
Same goes for services. Do your homework before you start following commonly posted advice about disabling this service or that service. Understand what you're disabling BEFORE you disable it (or, better yet, set it to start manually instead of automatically).
Remember that, when you are logged on as a member of the Administrators group, you are capable of crippling the system. And, though it's a pretty straightforward process, the re-installation process for W2K is pretty lenghty. If you whack the system too many times you'll become tired of doing re-installations.
Windows XP is on the horizon. You might want to stick with Win ME (or Win 98SE?) in the meantime and just go to the personal version of Windows XP when it becomes available this Fall. It's likely to be quite a bit more user-friendly for the user who doesn't want to spend a bunch of time sorting out the security and file system and services esoterica in NT 4.0 or W2K. Naysayers notwithstanding, it's looking like a pretty good OS.
BTW, unless you are running apps that use BIG memory (like CAD apps or Photoshop) OR unless you are running lots of apps with lots of open windows simultaneously, you will be unlikely to see a noticeable difference in performance between 256 Megs and 512 Megs of RAM. The Commit Charge on my 256 Meg notebook rarely crests 200 Megs, and I beat it hard. (Though I certainly don't do Photoshop or CAD on it.)
Have fun with the toys!
Regards,
Jim