After having trouble setting breakpoints in a dll file in OllyDBG 1.10, I googled what the problem might be and found that it probably was caused by the fact I am running Windows ME. I am wondering if anyone can give some some clarifaction of the problem, and possibly a solution.

I've seen it in the manual and on dozens of websites.

The solution would be to upgrade, duh.

sadly thats not an option. I am wondering now if a hardware breakpoint would work in the place of a regular breakpoint (which I cannot set)

Well, instead of posting about how you're "wondering" about the answer, why didn't you take those ten seconds or so to actually TRY your hypothesis?

In windows ME or 98, you cannot use hardware breakpoints, or breakpoints in systems dlls, or stack , this is a serious limitation, for this reason if you cannot upgrade, use other debugger in 98 ME, try TRW2000, softice, etc, OLLY is very limited in this OS.
For other side upgrade from ME is mandatory, is a very poor OS, with hundred of problems, the money question is irrelevant, you can upgrade to NT, 2000, 2003, XP, and all can be obtained free, without spending money, and with any of the NT based systems, you will have hardware breakpoints, BP in dlls, stack and all the powerful combo of ollydbg.
I cannot understand today a reason for not upgrade for this infamous OS.
Ricnar