I don't consider myself any great IT guru, but I have had some experience with some of the problems that you are talking about. First I want to say that I have a 133 mhz Compaq laptop that won't die. It is so old it doesn't have a usb hub. I keep it around the house on a wireless network and just beat the hell out of it. I think it is great. I understand the problem of propriatory hardware though and have had to deal with that. It is a pain but isn't any different than having to buy a Mercedes tail light lens from the dealer.
As far as the key strokes falling behind. The spyware thing is scarry. If someone has installed spyware on your system, you need to get it off of there. I think that those kinds of programs are really hard to get rid of, rather like a virus.
How to tell how much ram with windows ME.
Go to start, click on settings, click on system, click on the performance tab. You will be able to read how much ram you have installed but more importantly find out how much is being used at that exact moment. So when your puter(I like that) starts to act up go to this and find out how much ram is being used. If you are only using 50%, then you know that something else( maybe the spyware) is the problem. I guess you know this but that spyware is copying each of your keystrokes and saving it for someone else to read later. A bad thing.
Next, please tell me you have a good virus scan software that updates daily.
ME is a bad operating system. It was released too soon with many problems. But there are fixes. You need to get windows update regularily and keep the system updated. I am using ME on this( my company laptop) and it works pretty well after all the updates but it used to have some real problems. Sorry, so long, hope it helps.