I am running a Thinkpad 380XD which is a Pentium-233 with 96M of RAM. Quite similar hardware to you. I have never had a 2.0.x kernel work properly. The earliest kernel that I had work on my machine was ~2.1.90. My sister has a Thinkpad of the same model, but her machine wouldn't work reliably until I installed one of the latest 2.1.x releases before 2.2.0 and set : CONFIG_APM_ALLOW_INTS=y
I strongly recommend that you try a recent 2.2.x kernel. -- I'm in Utrecht. I'd like to meet any Linux users in the area, or any other part of the Netherlands.