It's not letting you format because Windows itself is running on that volume You need to reformat during the installation itself, which may not be possible with an upgrade - although like you said, since WinME can't use NTFS, you can do that full format during WinME's full install instead. Clean install of XP (needs full version) is more stable than an upgrade from a previous version Windows in any case, especially from ME Plus it's faster since converting a FAT32 drive to NTFS causes nice fragmentation - you might want to at least defragment if you don't intend to reinstall again