"Can't find it".
It could well be that Packard Bell put a copy of the necessary files on the hard disk. A usual folder is c:\windows\options\cabs. You can locate the folder, if it exists, by searching in Explorer for *.cab. If there is a folder with a lot of cab-files, maybe named winxx.cab (with xx a number) that might be it. Or have a look around in Explorer, or ask Packard Bell tech support.
Then when the install program ask for the cd, browse to that folder.
If the Windows installation files (that are those cab-files) are NOT on the hard disk, you'll need a Windows ME setup/install CD. Get it from Packard Bell, from Microsoft, from your usual computer shop or secondhand (like from eBay).
If a product says you don't need any special software for ME, they mean everything you need is included with Windows on the Windows CD. But that doesn't mean that it is installed on your computer in exactly the right way. So that CD (or a copy of it on the hard disk) is needed during the install of the camera.
It's all very regular and usual. Nothing to worry about. Just locate the necessary files or CD and everything will be nice again.
Hope this helps.
PACKARD BELL RUNNING M.E. NO PROBLEM. PLUGGED IN MY DVC BY USB AS TOLD IN INSTRUCTION BOOK. COMPUTER NOW ASKING FOR M.E. DISC,CANT FIND IT. IS THERE ANYTHING I CAN DO ie DOWNLOAD ANYTHING OR GET A NEW ONE AND FROM WHERE.I DONT KNOW HOW THEY WORK,WHY WOULD IT ASK FOR M.E DISC. DISC I GOT WITH CAMERA SAYS I DONT NEED ANYTHING FOR M.E.? THANKS