Best Linux Distro for Guest OS?

[Parallels User]

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[David Corrales]

Running as a host or guest?

 

[Parallels User]

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[constant]

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If you have at least 1Gb of memory then whichever is your personal prefference from the list.

If you have less, then consider choosing a light weight window manager.
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[David Corrales]

You could easily run something like Xubuntu using 256 or even 128mb.
http://www.xubuntu.org/
You'll get updated packages, the best package managing system out there IMO (apt) and it's lightweight

 

[Parallels User]

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[David Corrales]

You can boot Xubuntu and only assign 128mb of memory to it.
Btw, you should check e-bay to see if there's any cheapo memory modules for your lappy.