Upgrading To Replication

I created an application with the MSDE (SQL server 2000 edition).

The application handles the contents of an automatic wharehouse system, on one side it interfaces to the wharehouse hardware (industrial controllers) and on the other side it interfaces to an As400 system using the IBM ODBC driver. Database and application run on WXP proffesional.

As the wharehouse works round the clock, we would like to add a standby system. We do not need a failover system, it is enougth that the reserve system has everything installed and set up and that the database is up to date so the the wharehouse may be restarted using the reserve system.

So we require live database replication.

In order to experiment I took a copy of the database and put it on the desktop and portable in my lab, which are both running W2KP. I could not get the database published, the wizard round up with an error saying that the computer cannot be set up as a distribution server (error 14114).

I realised that I may need a server edition of windows to do this, is this correct?

What would be my best (cheapest) option to upgrade, given that my requirements are very simple and straightforward **except** for the replication. Note that ideally the replication would include everything, so that if e.g. a user changes password, a view of stored procedure gets modified etc, it will all get replicated.

I seem to remember that SQL server 2000 required the enterprise edition for this level of replication, and had to be run on a windows server edition. As far as I can see the 2005 edition offers a limited replication on the standard edition. Would it be better to upgrade to this?

Would the 2005 server edition be able to do the necessary replication on W2KP/XP?

Thanks in advance for any advice!