Thought I better give you an update on this!!
I'd been running the cut down version of WinXP on the Eee PC and it was doing OK. Then I don't know what happened, but despite me having automatic updates turned off, one day it downloaded SP2 (I think) for Microsoft Silverlight. Then I found I only had about 70Mb free space left on the hard drive and was constantly reminded of the space "running very low".
I couldn't do a system restore as I'd turned that feature off to save space and improve performance. The only alternative was to reinstall my nLite version of WinXP which was still on my USB stick. However, despite tweaking the BIOS to boot off the USB stick, it wouldn't reinstall - just booted up WinXP as normal, and wouldn't overwrite the installation.
After trying that several times, I tried to create an even smaller version of XP using nLite - spent ages going through and stripping out things I didn't need, created a new USB version, only to find that it was larger than my earlier attempt!!!!!!
By now I was right hacked off with the whole thing, so decided to reinstall the original Linux Xandros OS, and then try to install XP from that point. However, i couldn't figure out how to do it from the various disks and files that I had, and I recalled Xandros was rather clunky with loads of bits obsolete and un-update-able. So I started to search for other Linux distros (or whatever they are called!!).
I stumbled upon something called EasyPeasy, which is a version of Ubuntu - most of the reveiews seemed to be from 2010, so it probably isn't the newest OS available, but the website said that once I had downloaded the ISO file of the OS, and the installer file that would allow me to transfer the installation files to a USB stick, it ought to be fairly quick to install on the netbook.
This wasn't even an Asus Eee PC specific installation, but I thought I'd give it a go. The old Dell desktop chuntered along taking a while to download the iso file, and then not very long to download the installer file. Then I ran the installer, selected the ISO, put the USB in, and it wrote it onto the memory stick in no time.
So I messed about with the BIOS on the Eee, plugged the USB stick in and let her go........ never mind the 2 hours or whatever it took to install WinXP from the USB, this thing was finished in minutes!!! And what a fresh looking interface it is - looks very modern and clean, unlike the original Xandros OS which looked very dated. What's more, I didn't even have to install the separate ASUS drivers, because everything worked from the outset!!
The best bit came when I selected that Two Ronnies clip on Youtube via Mozilla Firefox. With WinXP, this clip always stuttered and the sound was out of sync with the picture. In Firefox on EasyPeasy, it was smooth and no stuttering or buffering issues.
So impressed am I, that I might not bother trying to put XP back on it - I mainly wanted it to be able to run my Opcom Vauxhall diagnostic software....but I can use still my works laptop for that if I need to