When going from one version of Windows to a new one or simply a different version like ME to 2000 you have to expact some softwares will fail since they will see "not compatible with this version of Windows" messages appear. At this time when XP has already been around for all these years with Vista now released even there are plenty of free players to choose from that work well in XP.
For Retail Cyberlink's PowerDVD has been a champ for video cds as well as playing dvds. You can even listen to your music cds too. But when looking over the freeware types you may have to try a few to see what one works the best for you. AVS Media has a free one seen at http://www.avsmedia.com/DVDPlayer/download.aspx
The free dvd player there is provided by AverMedia and is free of adwares and spybots while you may see the offer to buy their retail version. I still have to try the download there on Vista to how it works with that newer version that is dual booted with XP here.