Are you sure it is 128K, and not 128MB?
The only reason I ask is because even the original IBM PCs had 512K of RAM. and they sure as heck didn't have 8GB hard drives. My first 286 had 1MB or RAM and a 10MB hard drive.
If it is actually 128MB, then many Linux distributions will install and run, but you will probably find that graphic performance is pretty crappy.
Up until recently, I had Ubuntu 9.04 beta running on a Dell CPxJ650GT laptop. when I first installed, it had 128MB of RAM and was very unstable and almost unusable. I upgraded the system memory to 512MB (maximum) and it worked pretty well.
Ultimately, I bought my mini, upgraded the RAM to 2 GB and the SSD
to 32GB, installed Ubuntu on it, and the old Dell is out in the garage, waiting to be listed on eBay.
I don't even miss the 14" screen....