Linux-watch.com installed MEPISLite on a system with an 800MHz Via processor, 128MB of RAM. This system barely ran Windows ME, and cried like a beaten dog at the thought on running Windows XP.
Read the full story here:
There are many distributions out there that run off USB devices. However, the MEPIS family is the only one I know of that includes an easy way to take your complete desktop with you in your pocket.
Last, but by no means least, MEPISLite is simply put together well. It is a smooth, clean Linux distribution.
With many smaller distributions, you may get the feeling that you're working with a kit rather than an operating system.
Now, that's fine for Linux gear-heads. But, if you just want to get work done on a slow machine, or introduce someone who's still using Windows 98 or ME to Linux, I haven't seen a better distribution than MEPISLite.
Check it out. I suspect you'll agree.
Suggested minimum system requirements? For practical purposes, I'd say 128MB of RAM, 2GB of hard drive, and 500MHz of processor.