If you want to run X with KDE or Gnome,
there's a big difference between 64 and 128 MB of ram.
I'm also surprised that you would class 500MHz as old
*sigh*
That being said, I think you'll find a stock Debian Sarge install
(pref 2.6 kernel) with an XFCE4 desktop environment very pleasant
to use, full featured, nice to look at, easy to maintain and very fast.
http://www.xfce.org/