Yeah, I've noticed that Windows ME gets that reaction.
Yes, I do have virus (McAfee) and spyware protection. I did recently (a month ago or so) have problems where I had to extract files from the ME CD that were corrupted. My guess is that my son went to a games website and maybe downloaded something "bad". It took me about 4 days to straighten everything out. These files were 2 .dll . I can't remember the exact files but they must have been very important because without them I couldn't get on the internet and I couldn't run any programs, not even my virus scan.