I have a Dell Latitude CPia, 366 PII with 128 Mb, and 12 Gig HD. I paid $400 for it a year ago. It works fine for what you're describing. I installed Open Office, Winamp, the Gimp, and a few MP3 ripping utilites. I always have Winamp running, and have had Open Office running at the same time with no problems.
The real key is keep things from running at startup. There's a lot of crap that sneaks in. Real Player, MS Office, and Quicktime are particular offenders.
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