Can I upgrade my pc to windows media edition or do I need a new pc

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Yes, you can install Windows XP MCE 2005 without no problems, the fancy name just means it has some special applications to turn your computer in a 'media center' (e.g. simple nice interface which you can navigate through with a remote control...), but you dont to use any of the special features if you dont want to, and you dont have to have any special hardware to install it.

Windows XP MCE 2005 underneath it all is just a WinXP SP2 with some nice apps to turn it into a 'media center', no special hardware is required - if you can install and run WinXP, then you can also install WinXP MCE 2005.
 
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