You can use any distro you like, but when installing make sure you take the option of installing the packages yourself. You can probably get it down to under a few hundred megs. I have never heard of Linux using less power than windows, where did you get that from?
As posted, just about any linux distro will do. You can keep the whole shebang pretty lean as well, for such a specific purpose.
Also, considering the purpose, you might want to play around with <A HREF="http://www.bitbox.co.uk/jukepeg/" target="_new">JukePeg</A> or <A HREF="http://www.jwz.org/gronk/" target="_new">Gronk</A>, a couple of network-based MP3 jukeboxen. Just have the laptop share a directory over Samba for storing mp3's and have the jukeboxe software go to that directory.
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dont worry about the distro... get one, uncheck everything. I mean everything. You need a kernel, and an mp3/cd player. nothing else. well maybe you might want some other little doohickeys, but not much else. I would even recommend just compiling your own kernel, and keeping it as lean as possible. I am not positive about the 2.4 kernel, but I think you could pull this off in about 50 megs. I am rather curious as to how you plan on playing mp3's w/out a screen though...
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