I usually recommend Vector but it requires something like 800MB to install plus you need a Swap partition so theoretically you could install vector but You wouldn't have much if any hard disk space left.
DamnSmall might be your best bet, but I'm not sure how compressed it is. It may only be a 50MB ISO but the compression used on the knoppix based distros is huge. On knoppix you can fit something like 2-3 gigs on a 700MB CD. What you might have to do is see if you can do a lazy man's install of DamnSmall. I saw it for Mepis (another live distro). What it does is, instead of installing the OS, copy the contents of the disk to your hard drive just as they are on the CD then when you use your boot media you use a command to get it to read the Hard Drive instead of the disk.
You might also try slackware. Many people swear by it but I haven't used it personally. It will let you select what packages you want installed and the absolute minimum choices should fit just fine. I will warn you that Slackware can be intimidating to newbies because of it's absolute control of the insallation. I have tried installing it and usually run out of space on my vector laptop because i select to much.
some other choices you might look at for lite Linux distros (these are all live like DamnSmall) are, Puppy Linux, Feather Linux, PHLAK, and Berry Linux Lite. A word of caution for Berry Linux is that it is a Japanese distro and defaults to Japanese so on startup you'll have to put in the following command:
My use berry is limited so I don't know if you can install it and make it default to english.
A few last notes for general:
Get a distro that has a boot floppy option
Get a light distro
After installation, Delete any unnecessary programs.
After Installation, Try to replace included software with lighter equivalents (e.g. dupe Mozilla Suite for Dillo web browser and slypheed email client).
EDIT: Try to get a distro with a 2.6.x Kernel or has ALSA included so you can configure your sound easier.
