I figure: if you had 1MB card, you could build a light and robust notebook pc with good battery life, running win98SE in stripped down form. Perhaps another card for data.
You might want to have a look at http://www.litepc.com/ for inspiration.
I think you will need to get a flash card connecting directly to the IDE port (something like this adapter.) or have a BIOS supporting booting from flashdrives.
For network thin-clients, booting linux or windows over the net: LTSP Project
If you do not need Windows Apps, Knoppix, comes with OpenOffice.org and other stuff, boots from the CD.
OTOH, Laptop harddrives do not use THIS much power nowadays and every modern OS & BIOS turns them off after a predefined time amount. Most of the energy goes on the LCD brightness…