I have a Dell P166MMX with 72MB RAM. I'm pretty sure I had XP on it for a few weeks, to see if I could use it as an MP3 server/streamer. I know I eventually went with Linux for months thereafter, until I upgraded the hardware. Given that the box was headless and only played MP3s, it was somewhat bearable.
Now running a Celeron 366@550, 256MB RAM, still playing and streaming MP3s, acts as a printing and scanning server. I've also got my portable MP3 player wired so I can transfer MP3s. My new project is getting my Palm to act as a remote for WinAmp.
-SUO