Sheri - keep also in mind that if you plan to use the iPod to do workouts with, hard disk based iPods (such as the 30GB and the 60GB models) may be damaged by jostling. For workouts, the flash memory based iPods (such as the Nanos or the Shuffles which have no moving parts) would be a safer choice. Though it REALLY limits you on the size. I used to have a 2nd generation iPod with 10GB of space - finally upgraded to the 60GB recently and what a huge difference (smaller, thinner, lighter, better battery life, video capability). Love the thing.
Ollie - agree with KarenM - you're going to need to upgrade to XP. And you'd be better off anyway - XP is a much better/more stable OS than ME ever was.
Masaki