What to do?

We have a 5-computer network at home, 2 Windows XP computers, a Windows 2000 computer, a Windows 98 computer, and my Slackware computer. The problem arises with the Windows 98 computer. It's pretty badly infected with viruses, spyware, Windows 98, and so forth. Needless to say, it's hardly working. The Windows 98 computer belongs to my sister, who's been begging me to fix it, but it proved impossible with what she was working with. I asked my dad for permission to just install a Linux system on it, and he said, "That's probably best."

Now, first of all, I don't know whether or not I want to install a complete-distro on there or not. Her PC is pretty old. It's at 300 Mhz, 32 MB ram, and it's all-around pretty outdated. Now, I've heard of ways where you can install a minimal Debian system on a computer, and let it connect to other computers to run. I was wondering if that's what I should do with her computer.

Now, my computer is pretty outdated as well. I have a 700 Mhz, 256 Mb ram PC, and I'm running Slackware 9.1. Now, since the whole house is networked, I was thinking that I could just have her use my machine, but I don't know if it would be advisable for her to connect to my computer, as it might slow it down too much. I personally run Fluxbox, because it's a light WM, I like how it looks, and it makes my machine run pretty fast, but since my sister is used to Windows, I was thinking I would have her use KDE as it is much more Windows-like. How much would that eat up at my computer?

So here are my questions. What would you advise me to do? Should I install a light-version of Debian on her machine, and let her use mine through that, or should I install a regular Linux system on her machine, and let her use her own machine. If you suggest just installing a whole Linux system on her machine, which distro would you reccomend. Also, could someone please point me to a website where I could learn about how you install something like a light-version of Debian to allow people to run off of another machine? Even if I don't use that on her machine, I'd like to learn to satisfy my own curiosity.

Thanks for your time.