Does anyone know how difficult it is to install Windows 98 SE on a Windows ME machine?  I have a copy of Windows 98 that I could install on our server which is currently running Windows ME but I dont know what kind of problems I could run into.

I cannot agree more!

How difficult it will be depends upon what other software you have on your machine and its state of compatibility with the new operating system.  DBA will run better on XP or 2000 but other software might run quirky or not at all.
 
I found a pretty elementary guide for upgrading from ME to XP here:
 
http://support.microsoft.com/default.aspx?scid=kb;en-us;324770
 
Its a Power Point presentation so I don't know if it will do you any good.
 
One thing you have to consider, depending on the age and condition of your machine and your future needs, is that it may make more sense to buy a new machine with XP pre-installed.  That would allow you to test it while your old system is still running.  If you have a problem during the upgrade, which is a real possibility, you have nothing to run on.
 
If you do the upgrade, do it on a weekend and backup all your data!  I would back up the whole hard drive so I could just go back to square one if needed.

Actually you should find that it will work better.
 
If you are up to 7 users though, you should seriously consider looking at a server based setup.

Thanks for all of the help.  I will load this operating system later today so keep an eye peeled for further posts should I (probably) get stuck

OK, Lorne, I concede, from that perspective you have a point.  Although Windows 2000 Pro acting as a "server" is not a bad compromise provided a regular backup of some sort is scheduled.  Certainly a BIG step up from a WIN ME "Server".

Ok You all knew I would be back.  I have installed Win2000.  when the machine boots it does not start the pervasive engine.  If I launch DBA the engine starts but I get a W3DBSMGR.EXE unable to locate DLL  MSVCP60.dll.  and then a btrieve error 3012.  The good news is all my DBA files and directories are on the drive intact.  Now I need to figure out how to get DBA back up and running.

Thanks Lynn, I noticed that from another computer when I tried to access the server it said I needed a network password.  I dont remember setting one when I installed win2000.  Do you know if this is normal and what to do about it?