Feanor

In my wandering around in search of the less bloated but still functional Linux distro I came back once again to mommy Debian, in its Wheezy - testing version (soon to become stable). I opted for the XFCE desktop environment and it is much lighter and faster than Ubuntu derivatives. It has two other major advantages, first you have got multiple options for installing instead of just an huge ISO that fits either a DVD or an USB key, like most other distros. The other advantage is that it comes with a reasonable selection of preinstalled applications (GIMP, Libreoffice, Firefox, VLC, etc). So far the only bug I have met is the network applet that displays the network connection as down while it is up.The only distro that was as easily installed and as light on hardware resource, while still being full functional, was Bodhi Linux. Besides Bodhi requires you to add all the applications by hand. Unfortunately its Enlightenment desktop environment doesn't fully support compositing on my old Matrox graphic card and available themes look awful without it.

So my updated list of Linux distros for old computers is:
1. Debian Wheezy (XFCE or LXDE)
2. Bodhi (Enlightenment)
3. Slitaz (Openbox/LXDE)

Note:
I have tried to install Ubuntu - minimal and then to manually add Xorg, desktop environment, login manager and applications. It is very impractical because you end with a semi-bloated system with lots of Gnome stuff that gets installed because of dependencies and full of issues because something is missing here and there. It is not worth the pain. By the way, I guess Ubuntu derivatives are a bit bloated for the same reason.