For what it is worth, I bought one of those $298 E-Machines recently and put PCLinuxOS 2009 on it. It was a very pleasant, very simple install --- everything went flawlessly.
The only fault that I found in playing with it was that using full screen mode with hulu was jerky. Otherwise, everything works quite well.
Good idea putting Linux on it, because it is woefully underpowered for Vista.
Did you try to get the money back for the Vista license you paid for?