I suppose this is where we all pitchin with our favourite mini-distibutions...
Although I recommended Slackware, for learning to put a Linux system together, if you want one that is up and running and usable as a desktop/web browser, then I recommend
BeatrIX, though I fear 32 MB is going to be rather tight for anything that has more than just X on it.
I run
BeatrIX on a 450 MHz PC, with 512 MB of RAM, but it will do fine with 64 MB. I have tried DSL, Vector Linux 3.something and 4.0, Red Hat 8.1 SuSE 9.2, and tiny Linux. Tiny Linux was the easiest - thought it is a stripped version of Slackware, with an old (IIRC, 2.2) kernel, so would have to be updated anyway - so you might as well use Slackware. Vector Linux 3.something was the best of the bunch, but a bit rough. Also, I could get my printer, the sound, or CDRW to work. From 4.0, everything bar th eprinter worked, but things were slow. DSL didn't sem to work properly at all, SuSE 9.2 was like treacle, and Red Hat 8.1 well, if it were a person, people would be debating whether to keep it alive or not...
BeatrIX was up and running from scratch and installed in less than 30 minutes. It does need a few tweaks and pokes, but if you read the "Start here" bit, you'll appreciate why it is the way it is!