FIRST
TRY THIS SITE:
http://www.michaelstevenstech.com/spellcheck.htm



SECOND:
Try getting your hands on a copy of Office XP, and installing it using the COMPLETE installation feature. It should upgrade your outlook to the latest version. I use it with Windows XP and the spell check works flawlessly.

Could be a problem with office 97 spell check and your version of outlook combined with XP...

THIRD
To install windows XP on a clean partition, this is my suggestion. It may work, then again it may not. Its worth a shot.

INside windows ME, make sure you have a ME boot disk. Shutdown ME,
then pop in the disk. You should see a command prompt
like below:
A:\

Type the following

format C:
'Then click Yes,
Wait, for a while, then restart your PC. Boot into your BIOS. Change the booting order of your PC boot to reflect the following order
CDROM 1st
HDD 2nd
Floppy or External disk 3rd

NOw take out the ME boot disk, and put in the XP Pro disk. Make sure its the full XP Pro that is bootable before you do any of this...
To check to see if it is bootable try the BIOS change then pop in your XP disk and turn on your PC. It should say Press any key to boot to CD................
If so, its bootable, if not, you need to get your hands on a bootable XP PRO CD.


Then follow through. YOu should install it on C: drive using the NTFS partition try the full format first, if that doesnt work, then try the quick.

One question, what kind of PC do you have? Is it a BYO(build your own) or a proprietary system?
Hope that helps a bit.. and welcome to the site.
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