"What distro would you recommend for running on a rather old laptop with only a 500mb hard drive? "
You can use a distribution like SuSE which allows you to select packages one by one if you want to pick only those packages absolutely necessary so that you can fit onto a small hard drive. You also can buy a much bigger hard drive for about $50 new or even less at a computer junk yard.
Another problem is that you need enough memory for the distribution's installer to fit. Check the amount of memory available on the laptop against the distribution support page. You can get around small memory problems by moving the hard disk to a large machine, installing Linux, and then moving the hard disk back to the small machine. The main problem with this approach is that the distribution installer will configure Linux for the large machine's hardware and the installed Linux may not work if the small machine's hardware configuation is too different.
Be prepared. Create a LifeBoat CD.