Setup needs more conventional memory to run

Hello,
I am running windows 98 and wanted to upgrade win Me because I have done so
on another similar computer without any problems.
When the setup program starts and begins by checking free hard disk space, I
get an error saying that "setup needs more conventional memory to run". I
looked at the setup file on the CD which advises me to free memory by adding
rem to lines of my autoexec.bat and config.sys files but strangely enough
these files have really nothing in them or have lines that are already remed
out !!! I have tried to start in safe mode and taking everything out of
msconfig but same result.
Then, the setup.txt file on the cd said that I could run setup from Dos so
with a boot disk from win98, I successfully started the PC in Dos WITH cdrom
but everytime I want to run setup, the error says that windows is needed to
run setup!!! Does anyone have any ideas? Thanks.