Hi Norman,
Linux does have a reputation for being able to work on more modest hardware than a windows based system of similar power and certainly the system you describe should run Linux OK. The one thing you don't mention is how much memory (RAM) you have in this machine. X11 needs much more than command line Linux and I would think that 16Mb should be considered a minium to run X11. For command line only access 4M is more than enough. Depending on how much memory you have you may also want to choose a small window manager (like fvwm) rather than a big one (like englightenment) or a big desktop environment like GNOME or KDE.
Some packages for Linux can be quite big and as you say 3 hours a month isn't very much on-line time.
One option would be to look for an ISP who provide more bundled time with their internet package. As I work for BT though I will leave it to independant Alug collegues to give you suggestions on this front.
The other option is to get the CD-ROM driver working. The first question has to be "does it work in DOS/Windows?" If it does then we know the hardware is OK and we just need to sort out a driver for Linux. If it doesn't work in DOS/Windows we may still be able to get it to work in Linux, but it isn't so certain.
As for problems specific to MuLinux I can't offer general help in response to a general description of the problem because I don't know that distribution. That said, there is often a lot of common ground between distributions and if the problem is that you try something and get an error message instead of the expected result then if you tell us what you were trying to do and the exact text of the error message then someone may be able to help.
For documentation, good resources are the Linux Documentation Project (www.linuxdoc.org) and your distribution's web site (I tried www.mulinux.com but it seems to have been parked).
If other things fail then another option open to you is to bring the machine along to one of our meets and see if we can solve your problem there. Others have done this and it has been very successful.
I hope this helps. Steve Fosdick.