heres what i would do
1. install debian potato or even older. they're smaller, security isnt much of a concern in a car, and they might boot a bit quicker.
2. build a new kernel and get rid of any stuff you dont need. maybe try an old 2.2 or even 2.0 kernel to see if they boot much faster. maybe delete junk like docs and logs and misc whatever files you dont need. sure this is something that would be considered insane in any normal situation, but if this thing is JUST gonna sit in a car and JUST play xmms, then hell, who cares. also, use xfree86 3.x instead of 4.x to save some space (i assume?)
3. install X and install xmms. after doing all this you'll probably have used up 100MB, just a rough estimate. could be even less.
if you want to go further than that, then you're going to have to do alot more work, and i'm not sure you seem willing or able to do that.
some random ideas if you are...
find out if xmms works in direct framebuffer, and if so, if directfb is smaller than x.
find another, smaller x implementation (i know there are some right?)
find a floppy distro and build all the stuff you need to get X and xmms working on it.
other than that, theres not much else you could do. we cant make your hard drive go any faster, or that p233 go any faster.
it seems like you're just looking for a quick easy solution, but i'm afraid there may not be one.