From personal experience, I can tell you Win95 runs terribly on any 386-based PC.
The general rule is 486DX2-66, 8 MB RAM minimum for Win95 but that's still not enough RAM for many apps.
It goes without saying NT would suck even worse.
Honestly, even if you could run a small *nix OS to maximize the potential of that system, it's hardly worth the effort.
For your daughter, you can load Windows 3.11 (WfWG isn't necessary unless you need MS networking) but again, 4 MB RAM isn't enough RAM for any common usage scenarios. It'll run Word 6.0 or Excel 5.0 adequately, but don't expect it to do much with a TCP/IP stack and Netscape 2.0. Even Opera 4 needs some memory to work with.