This article at The inquirer shows lightweight Windows and Linux for low-end machines with DSL and Xubuntu and several other distributions.
Read it here
Xubuntu is an official variant of Ubuntu based around the Xfce desktop and GTK+ applications instead of the standard Ubuntu's GNOME desktop and apps. It's not vastly slimmer than vanilla Ubuntu – you really want 192MB of RAM and 3GB or so of disk – and is a little less customisable, but it's still Ubuntu, so you get the updates and software choice of its bigger sibling.
Your humble scribe has not yet personally tried these, but ZenWalk aims at a broadly similar specification and has some good reviews. So does Deli Linux, and for 686-level PCs, Arch Linux and CRUX both have their fans. ZenWalk even has its own spinoff for even lower-end kit, SaxenOS (formerly STX Linux).