One without a GUI. The CPU and Ram will be too slow for a decent GUI.

The hdd is no problem. A web server with a CLI will use 300-700mb. Neither is the vid card.

If you intend to run MySQL you need 256mb minimum or you will get strange errors.

See tutorial here for a command line debian based system:

http://www.daniweb.com/forums/thread78131.html

I decided to install UBUNTU to run with Windows XP prof. I will do dual boot. I have 2 questions.

1. Do i have to install both in C:\
2. Can i install Ubuntu in other partition like D:\

Thanks

Ubuntu will run extremely slowly, if at all on that hardware. That machine needs a ram upgrade to say 256 though, then it will be fine for a very light window manager or command line operation as a lamp server.

In relation to your question, yes, you will have to partition your hard drive. Install windows FIRST and when partitioning, do not make the windows partition (c) the full size of the drive. The space left over can be used for linux. Most modern distrubutions can dual boot with windows very easialy and some include the facility to shrink the windows partitions of already installed systems.

Here is a thread discussing various low resource using operating systems:
http://ubuntuforums.org/showthread.php?t=575456

Please note that it is based upon image size (hard drive/storage size).

And here is a thread geared towards laptop and old desktop users (Ubuntu biased): http://ubuntuforums.org/showthread.php?t=478237

Hope those help.

debian netinstall

or DSL

either way, none of them is a newbie OS to install. try following one of the appropriate guides on howtoforge.com

I think i have to use my decent desktop rather than the laptop to avoid strange errors as jbennet mentioned. It will be first time for to use Linux for LAMP puposes. I was a 100% Windows user but time to learn Linux as well.
Thanks for your information guys