You should be fine. I have run XP Pro on numerous DT/LT computers upgrading from Win98 etc. FWI I am typing this on a 4-5 old Sony desktop. It originally came with a Sony ver of Win98. On the Sony site they state specifically state they do NOT recommend installing XP. In actual fact XP Pro has run flawlessly on it (and on 3 other computers) for over 2-3 years. BTW Win2000 also ran fine on all the DT/LT but XP Pro runs far nicer.
I bought a new IBM T40 for about $1580. It comes with a 3 year warranty, XP Pro, 40GB etc. That aint too far from the costs of upgrading the older refurb units you described etc.
MisterNice
[This message has been edited by MisterNice (edited Jan 12, 2004).]