I'm running XP on a PII 233 with 64M RAM and a 4G HDD.
XP is considerably faster than '98 was, and boots much sooner. What I did was just set my MSCONFIG startup options so that only the things I needed to run would be used at startup. I installed XP, AVG Free, Spybot, AD-Aware, and Firefox. With that installed it runs fine and is completely bearable to use. I use it for the same things. Mostly for travelling but also for my OBD scanner software. XP is definitely doable on an older machine you just have to get it setup correctly.
