XP would run fine, but only with all the bells and whistles turned off. So as somebody said that would resemble W2K SP3. As for drivers: It is an older Laptop and you will be able to get those drivers for 2K without problems, but if you can't be bothered, install XP since the chances of having all th drivers needed already in the OS are much greater.
Personally I like Win 2K better than XP (XP gives me no decent reason to upgrade, almost all drivers work on both, i don't miss the theme stuff, boot time is a little longer but no excessively so, all my games run and: I paid for W2K so I plan to get my moneys worth out of it before i switch)
BTW: My dad runs XP on a P2-266 laptop with 256MB RAM. All the bells and whistles turned off and it runs well for his purposes.