<insert Windows ME is a piece of shit joke here>
<sigh> I'm assuming you mean a 3 1/2 floppy disk is now bootdisk?
If so in short... a floppy disk is not big enough to hold an entire MS operating system.. yes you'll need an operating system CD to do an install.... and you really need a full operating system install CD as oppose to an upgrade operating system install CD which would try to check for previous versions to qualify you for the upgrade.
Here's my suggestion... don't reinstall ME, go buy a copy of XP or at the very least 2000...really.
Now you realize that you are going to lose everything on your HD with a reformat/install right?