Earlier quoted context omitted.
On my 256 MB notebook I wasn't able to install Ubuntu with Gnome. I could be that 384 MB is enough, as I had better luck with 512 MB computer. As far as I know Windows XP can install on 64 MB, that's six times less than 384 MB.
Should have tried Debian; they have an optional text based installer that probably would have enabled you to complete the install.
Ubuntu has the text based installer too. But still Gnome is simply not a good choice for a 256 MB computer -- the footprint of it is just too big. Luckily there are other offers.