I see two possibilities:
1) the notebook's chipset can't handle a 1GB module.
2) as QS says, the module you tried may not be compatible, even though in theory it should work (you are right about the backwards compatibility).
Since the old module was PC2100, it must be a *very* old notebook; perhaps the pc2700 module doesn't include pc2100 speed setting info in its SPD; if your notebook BIOS allows manual setting of memory speed/timings, you might be able to work around that, but very few notebook BIOSs have such modes.
Many memory vendors have online "configurators" that tell you which of the modules they sell will work with your notebook, and back this up with a money-back guarantee if it's not compatible. You might try buying a module from such a vendor.