The MIT Review has an interesting bit of news on the next evolution of the OLPC program. The original operating system, called Sugar, is being modified so that it run from a USB flash device. Because Sugar is build for low-end hardware -- what else does one get for $100? -- the operating system and its bundled educational applications should run great on old hardware your school might have in a back room. Sugar, BTW, is a version of Linux.
Sugar and the applications that come with it have been extensively tested with school kids and are in wide-scale use around the world. You know you cannot upgrade your old system to Windows Vista or to OS X, so you have nothing to lose. There is no installation required. You download on to a USB device and set the PC's bios to boot from the device. Unplug the device and the system will boot from whatever is on the hard drive.