It's funny that you ask, packerbacker. I have had that identical problem for months, and its been my reason for roaming message boards, asking questions to which the answer is never easily given. It's a tricky situation, to say the least, but I will tell you everything I've learned from my own experience with it. First, no matter how you look at it, Windows ME will have to be reinstalled. You see, the VMM32.vxd is a crucial startup file that is used only on the Windows ME platform. Interestingly, it differs from machine to machine, so the only way to replace it is indeed to reinstall Windows. In other words, do not try copying the file from another Windows ME computer; it has been done, but has and probably will never work. Anyway, here is the first site I recommend (text within the quotes is the URL): "http://www.easydesks...ews/news10.htm"
At the very least, the site will tell you a little more about your problem. More importantly, it outlines a manual, though tedious, way of fixing the corrupted files. At this point, I must ask you what type of restore/reinstall CDs you even have. For example, since my Windows ME computer was manufactured by Emachines, I have a "Restore CD" that reformats the hard disk, returning it to the way it was when shipped. Obviously, it has been of little help to me in dealing with the problem (since it only fixes the issue by deleting all data), so my hope is you have a different disk. I'll let you start there: let me know what you have in terms of those CDs and try the first website. Also, if you'd like to start recovering you're data, use a Windows ME start-up disk (go to the site "http://www.bootdisk....m/bootdisk.htm"
and download one of the ME boot disks on another computer) to then go to the command prompt after starting the afflicted computer up with the disk inserted. From there, use DOS commands such as change directory (cd Windows, cd Desktop, etc) to navigate the hard drive, and then copy the desired files onto a floppy using the copy command. I know I'm giving you a lot of information, but I feel you need all the options you can get. Having been through the same ordeal as you (my computer still isn't even fixed), I have smpathy for you. If you need more help, more background on the situation, or anything else, just ask.