-Ubuntu or anything Debian or Debian based.
-Firefox, VLC are available
-Photoshop CS2 works with Wine, CS3 is in the works
-Vegas in a no go, unless you use an older version, like version 5, but then you don't have the ability to preview. Or you could use MainActor v5.5.7, which I believe is the last version that was released, it has been discontinued but was pretty decent. It was closed source and cost $160+, I suggest finding a torrent and since no one is losing money on it, you'll be fine.
-Free, some companies charge for programs like Transgaming: Cedega
-Damn Small Linux - "Run light enough to power a 486DX with 16MB of Ram"..."Run fully in RAM with as little as 128MB (you will be amazed at how fast your computer can be!)" - from damnsmalllinux.org. Ubuntu (standard Ubuntu) "Ubuntu is available for PC, 64-Bit and Mac architectures. At least 256 MB of RAM is required to run the desktop install CD. Install requires at least 4 GB of disk space." - from ubuntu.com. The ubuntu install cd is a live cd, meaning you can run it and test it out before installing, running straight from the disk.
Edit: The seller obviously hasn't used Linux. Those guys are almost always morons, and there is the proof of it in your statement.
ReactOS is like Windows 95...
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