You have a number of choices, but I would go with something like Debian(http://www.debian.org/) Potato or Woody, that generally uses a 2.2.x kernel. With an older machine like that, you won't need all the bloat & features of a 2.4.x kernel, and it should run fine with 16 meg ram. As far as a gui goes - Blackbox or some other light weght deal will do you right.
btw, the Debian laptop mailing list is a superb resource for info and help, there are a ton of folks who'll bend over backwards to try and help you get things right.
Check these out:
http://lists.debian.org/debian-laptop/
http://www.linux-laptop.net/
news://comp.os.linux.portable


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