On my slower PII, with less than 200mb of ram, I use XUbuntu.
You should be able to use standard Ubuntu on a PIII with 256mb of ram just fine.
Ive also used Puppy Linux which is bare bones and very fast on old machines.
I think I will try out your recommendations on an old p3 box. I only have one PC left that has VC++, once that dies I will lose my ability to compile C code, don't use C much any more but then I need C I need C (hard ware calls). So I need to get a another C development box ready to go.