8.0GB+ for a windows folder definitely explains that the remains of windows ME is still in the windows folder, maybe, and my windows folder with all the latest windows updates is only 2.2GB...Unless you go into the windows folder adn specificially find a folder called Windows ME, I would NOT go in there and delete files. You can only run 1 operating system at the one time but can have more than 1 loaded on your system.
To turn off system restore, right click my computer, go to properties, click on system restore and check "TURN OFF". This will also improve system performance and will only save you disk space if you have restore points (which some programs do create when installing them)
To reduce the recycle bin, right click the recycle bin, go to properties and lower the slider bar. Do not turn off the recycle bin or make it 0%. This is your protection against deleting unnecessary files and being able to un-delete them .
Hard to believe your biggest folder in the program files folder is less than 200K. Your 'common files' folder should be 5x bigger than that. MS office takes up 400mb, MSN messanger takes up about 15MB, my printing software takes up 7MB...