Even xubuntu would be too slow I guess. How much RAM does the machine have?
I really don't think you will manage to get that machine to be attractive to a schoolkid. You might be able to get it running, but not in a way that a youngster would use it.
Believe me, I used a similar system for the last months. I had 64 MB of RAM and I didn't use xfce because it was way too slow. I ran a really really stripped down Slackware and the only window managers I found usable played in the fluxbox/icewm league. I didn't use a graphical login though to save memory and didn't even have KDE/Gnome installed.
A seven-year-old would't like being presented to a black screen with blinking cursor too much, I guess