Reinstalling Windows ME will likely not resolve this problem (unless it's a clean reinstall). The error is probably caused by a damaged display or DirectX driver. Both should be reinstalled.
(1) Download
DirectX 8.1b, but do not install it yet.
(2) Remove the current display driver. To do this, open the Add/Remove Programs tool in the Control Panel. If the display driver is listed, double-click the entry and choose to uninstall.
If the driver does not appear in Add/Remove Programs, right-click My Computer, click Properties and Device Manager, double-click Display Adapters and the listed videocard, then click Driver and Update Driver (click Next as needed).
Choose "Display a list..." and "Show all hardware". In the left pane, choose "(Standard display types)"; in the right pane, choose "Standard Display Adapter (VGA)". Click Yes to dismiss the driver update warning, and continue the installation. Restart the computer when prompted.
(3) Double-click DX81eng.exe to reinstall DirectX, then restart the computer.
(4) Reinstall your previous display driver. Because I don't know which videocard or onboard graphics device you're using, I can't describe the exact steps. If it's a self-installing driver, just double-click it; otherwise, you'll need to reinstall via the Device Manager. Choose "Display a list..." and "Have Disk", then browse to the location of the driver.