I have been toying around with an old 600Mhz Intel Celeron 64MB over the last few days, trying to find some use for it. In terms of actual speed it is pretty impressive with WindowsME it boots up in 40sec and the overall experience there is perfectly fine, but of course WindowsME isn't support any more and you can't find new software for it.
So next step was to look into Linux, browsing around the Ubuntu page gave me the impression that below 256MB that wouldn't be any fun, so I didn't bother to try it and went directly to Debian, which should have lower system requirements. That however didn't work to well either. First of Debian Stable didn't want to run Xorg, due to some graphics driver misshape, after that was fixed with a dist-upgrade, the thing however just was to slow to be of much use. Memory usage of the normal Debian Stable was always around 55MB when Xorg and LXDE was running, with basically nothing else. So it already was right at the max before doing anything demanding. I didn't bother to figure out, who exactly is wasting the memory, but gave Damn Small Linux a try instead.
Damn Small Linux is pretty impressive. It comes on as a small LiveCD and manages to boot into Linux with Xorg and Dillo as a webbrowser running without problems, just using around 20MB doing that. Installing Damn Small Linux to the HD also went smoothly. The thing neither looks as good nor is quite as responsive as WindowsME, but it is a perfectly usable Linux from what I could tell.
Overall I am still not quite sure what that laptop is still good for, the 64MB RAM is kind of a show stopper, the 5GB HD is also rather small and only having a single USB slot doesn't help much either. But Damn Small Linux works and that WindowsME might be good enough for some older games and watching DVDs.
Update: I now also gave Puppy Linux 5.1.1 a try. The LiveCD is a lot more demanding on the RAM then DSL, with 64MB already being already little to low, killing the X server and dropping to console to add a swapfile however fixed that. Installation was also a bit problematic, as Puppy Linux doesn't format the partition, you have to do that manually, else Puppy Linux will just install its files over what is already there, possibly getting confused in the process (installing over DSL Linux resulted in an unbootable system). Once past that trouble, it somewhat runs, but the RAM is still pretty maxed out, so your not wanna try to start any heavy apps, I guess thats the price you pay for having a more pretty looking GUI.