To start off I think some non-harddisk optimalizations will help out better. The "official" 7.2 is out, better grab that one. If the memory strategy of the 2.4 kernels are a bit too much, try the 2.2(20) series. It's what I ran best on the 'ol 133Mhz-iHX-128MB. Secondly, don't use ext3 as your filesystem, a recent test (mandrakecorp) shows ext3 as (a bit) slower than ext2, and for internet surfing you don't need it's overhead of journalling features. Third, if there is no distinct need for KDE, ditch it and use a window manager like Blackbox or IceWM. Both need much less memory to run, and by ditching KDE you'll gain hd space as well by deleting +30Mb's of libs. If you really need KDE (who does?) youve gotta add more RAM. Finally make sure you don't run any daemons/automounts/rawdevices/etc/etc you don't need, and recompile your kernel without excess modules.
Tuning/cutting down is IMO necessary to run with such low memory requirements. The whole system wil benefit from that especially X, since it will need an unfair share of your memory to run itself in, leaving less room for "toys".
On to the hd stuff. If the bootmanager boots your Linux, there's no need to add a /boot partition. This is only needed if you've got an older version of a bootmanager like Lilo that won't boot partitions above the 1024th cylinder.
I don't read your partition table well, can't make any sense of that, maybe someone else can, or plz repost it clearly.