64 Mbytes is enough, and 3 Gbytes is enough hard drive space. I would suspect that AOL7 is more likely to be causing problems than Windows ME. Try switching to Internet Explorer or Opera and see if it makes any difference.
Check the minimum system requirements for the programs you are running. AOL may specify at least 64 Mbytes and recommend 128 Mbytes. If so, that is the cause of all the page file swapping. If you can't increase your RAM, reduce the workload.