Any up-to date Linux disro should run fine on this, however, you'll want to run a lightweight desktop enviorment on it, such as IceWM, instead of KDE or gnome. zsnes has a linux port, but you have to complie it, ant it probably won;t run great on that computer. Many emulator have linux ports. check
http://www.zophar.net/unix/unix.phtml (if you want roms, PM me) You shouldn't have any problems playing MP3s on it.