Replying to NS what should I do with my aging laptop? (Intelligent answers only, read this Nomensteven)

OK so I have to deal with an old Dell laptop until i go to college next year.  I'm going to reformat it soon cause its slow as hell then only install the programs I need, because I can use the comp at my mom's for shit like video conversion and DVD editing.

It has 640MB RAM, and a single core Intel processor (Celeron I think, I don't have it right now), and onboard graphics (cringe).

I want these programs on it:
iTunes (yes I know how to get gid of its stupid background processes)
Firefox
VLC Media Player
Microsoft Office (or open office)
Maybe photoshop (I have a disk for PS 6, its really old but good enough for me)

So what I need help deciding is what OS I should use, cause I really have no idea which is best for what I want to do.  I have these options:

windows xp pro
windows 2k pro
or if anyone knows of a good Linux distro for what I want, I could do that too

Any help from someone who KNOWS WHAT THEY ARE TALKING ABOUT would be greatly appreciated.