With the laptop off, put the Startup disk in the floppy drive and power on. The machine should boot to the floppy and give you a list of options. Choose option 1, to "Start with cd-rom support" and press "Enter". It will load the drivers it needs to use the cd-rom. Put the installation cd into the cd-rom drive and close the tray.
Once at the command prompt (A:\), type e: and press "Enter". This should give you the E:\ prompt. At the E:\ prompt, type setup.exe and press "Enter". This should start the WinME installation process, which is just what we want. If you see ANY warnings about formatting or "all data will be lost", cancel the process and let me know. Otherwise, let ME install over itself...this will replace the corrupt system files and straighten out the registry.
Let me know if you run into any problems...I'll hang out here until the process completes.