I checked out most of the distributions suggested in this post with a Pentium 3-266 MHZ, 128 RAM, 10 GB harddisk desktop. This is much more than my laptop but I like running a pilot before messing with the real thing. Here are my impressions:
(What is say below relates to simple/naive install and I did not add or remove any packages from initial install. I wanted an x windows therefore did not go for smaller version of the following distros.)
Vector Linux is too big (>800 mb). It has lot of packages but as default does not allow user to control their installation (in comparison to fedora which allows user to control the packages). It was ruled out because of its size.
Puppy Linux live was fast and I was not clear about how to install it on harddisk. I am sure it is not difficult but I did not want to invest time in it. I also did not like its Windows like interface and graphics.
DSL was equally fast and had slick interface (based on Debian/Knoppix). Hard disk installation is explained rather well on DSL forum and is straightforward . Please use google and wiki to find how to install DSL on hard disk(I am currently not allowed to post url on this site). The installation was fast and the results satisfactory. Though some prior knowledge of partitions etc is helpful.
Zenwalk has a good installer but like Vector does not give choice while installing. It installs gnome and open office among others.Thus, it would have swamped my 2 GB harddisk.
My guess is Zen and Vector are geared more towards standard users and not towards lower end (ghost) computers. I think I will stick with DSL (and if that does not work out invest in figuring out Puppy).
Thanks everyone for responses and suggestions.