Earlier quoted context omitted.
It seems to frequently be true that Microsoft releases a horrifying nightmare OS, polishes is up and removes hated features, and then releases a new version. It's been a bit of a pattern. Windows 8 -> Windows 10 Windows Vista -> Windows 7 and even before that: Windows Me -> Windows 2000 -> Windows XP was a pretty solid chain that shows it over three releases (personally I think XP was buggier, I don't know what the i…
I really need to dig very deep into my memory; wasn't Windows ME kind of dead on arrival? And MS themselves half acknowledged it by releasing XP within a few months.
The Win9x/ME (please read as DOS based) series of OS was intended for home users.
The NT/2K was intended for business users.
Only as an example most games at the time would not have run on NT/2K, and Win9x/Me was essentially single-user only.
For some reasons with XP the good MS guys decided to force down the throat of pro/business users (that were very, very, very happy about Windows 2000) the bells and whistles and graphics they didn't ask for and force down the throat of home users (that were very, very happy about Windows 98, not so much about ME [0]) the complexities of the NT, user access, permissions, NTFS, and other things that at the time made no sense whatever.
Basically they (the MS guys) unified the two branches into one and the result was (of course) a compromise.
[0] I know it is hard to say this, but ME, beside some quirks that there was no time to fix, was not as bad as it has been depicted, as a matter of fact the "best" bastard retro system you can make today is a Windows 98 with selected components of ME integrated/backported or a ME with some features of 98SE brought back, the failure of ME (not entirely unlike the later Vista one) was greatly induced (IMHO) by two factors, underpowered hardware and issues with drivers, both - if you want - essentially the responsibility of OEM's.