I had a similar laptop given to me about a year ago. I just threw Slackware on it, and everything worked off the flop - no serious tweaking.
That little mouse-nipple which you refer to, acts just like a typical track-pad; at this point, there shouldn't
be a modern Linux distribution that does not support it (excluding embedded and specialty distributions, of course).
Mind you, Slackware is not for the faint of heart. If you would like something pretty fool-proof, on that older hardware, I highly suggest Vector Linux