My setup was a Compaq Armada M300 laptop with a keyboard that was missing a few key caps, a battery that was shot to all hell and held only 5 minutes of charge, and a HDD that was completely broken.
I used a 128 MB USB stick for settings and my home directory, and had a Knoppix disc in the CD drive at all times.
It did indeed run pretty well, at least well enough for me to play around with it as a 14-15 year old kid and until I had finally saved up enough money to get me a new (used) 20GB HDD on eBay.
Good times. I kinda miss it.