The desktop I have has only 256M RAM; it can handle Elive. The nvidia card handles all the heavy lifting in graphics. If your graphics chip works well in live mode (onboard intels could handle 2d and
maybe a fancy ecomorph cube); I'd say go for it. But if you*ube and flassh are important to you, that would push it a bit. Other distros, though tiny, aren't as good looking and would be insulting to my gfx card (BTW I had to misspell deliberately to avoid flagging). Puppy and PClinuxOS have e17 spins too, so you have other choices as well, with active work ongoing. I just couldn't handle puppy's package system. Elive handles all my multimedia on that old system, except for the mp4 hogs, so I haven't moved away to get PClinuxOS yet. That looks encouraging though, as it has the newer e17. My screenshots are mostly from the desktop e.g. shedied.deviantart.com
The 128M? I'd load it with console apps even while on the desktop, and I'd limit firefox/iceweasel usage on it. Do you have mad CLI skillz?