I currently have two old laptops, a Sharp 486DX2, and an Austin 486DX4. Both are running slackware 10.
The Austin runs at 50, 75, or 100 mhz (settable in bios) and has a 1gb hd (upgrade), and 12 mb ram.
The Sharp is 66 mhz, 750 mb hd, and 20 mb ram.
The Austin was the first, and I installed the zipslack distribution on that using an Iomega 100 mb zipdrive.
With the Sharp, i used the Hal91 boot floppy to establish a PPP serial connection (using null modem cable) with a desktop system and transferred desired slackware packages over to the laptop using that.
At this point, i think finding a boot floppy with pcmcia support and then using compact flash (vi pcmcia adapter) would be the best solution. Especially considering the the available space on the hard drives of old laptops, and the size of compact flash storage.
The Austin is currently running slackware 10, and is online with a linksys wcf12 compact flash wifi card via pcmcia adapter. The sharp is being transformed into a terminal after my loss, yesterday, of my desktop monitor (working on the sharp is what led me here).
I use Xvesa to provide X on the Austin, and plan on doing the same with the Sharp. It is built from the XFree86 sources and is supposed to be considerably smaller in size and resource usage. For that matter, I am unable to start X at all on the Austin as the machine just freezes - with Xvesa I can work fine.
To note, I only have 512k video ram, and the best resolution Xvesa allows me is 640x480x4 (9" screen). I have had alot of problems getting this machine working and I am still troubleshooting. For example, when using 6x10 font with Xvesa, ncurses based applications make a real mess of the display ...
BasicLinux is a distribution you may want to look into, it provides linux on 2 floppies and includes X windows (Xvesa).