Check the Update Advisor on
THIS PAGE.Keep in mind that even if you can update, an older computer will be
slow running XP.
You should be able to use an upgrade disk just fine. You will have problems though if you ever need to reinstall. If you wanted, in the future, to format and reinstall, the upgrade edition will ask for a previous version of windows. You can usually just place in the 98/ME cd. I dont know if it will recognize the HP restore cd.
Are you saying you have 2 HP machines? If so, installing the software from the new one onto the old one would be illegal.