If you want to use Ubuntu, I would suggest doing the minimal install
sudo apt-get install xorg menu fluxbox
After that you may need to install synaptic. Fluxbox is a great window manager. You most likely won't get any laggy visuals when using it.
You could also install abiword instead of openoffice.
I think the minimal install of ubuntu gives you the choice of which flavor of ubuntu you want to install. You could install the new xubuntu. It's pretty lightweight. I'm using it on a p2 with 256 ram at the moment. I don't have any lag issues. (except for while playing videos, which is to be expect with such an old machine) I believe that the xfce desktop that xubuntu is based on uses less system resources.
Since you've already installed it you could use a package manager to install fluxbox. The next time you login at the xdm login screen, there should be a button that lets choose which window manager you want to use. Choose fluxbox and give it a whirl.