* USB drives didn't come up correctly - it couldn't see anything past the "root" hub (as an end user it was just a USB port on the laptop).
* Wasn't able to connect to the internet using either the Belkin wireless card or the standard ethernet port.
* Stability was relatively impressive, didn't handle lack of RAM too gracefully though.
As there wasn't an easy way to get any kind of media into the laptop, I gave up. Getting either of those working well could at least extend the usefulness to being a great writing machine. Gvim + LaTeX and I'll be fully away.
Half the time I think a person wanting to rip off Windows (I know, I know) would be better off writing a Windows 95/98 looking X11 window manager and hacking it to only use Wine. Seemingly for free you would get tonnes of hardware support and the obvious benefits of Wine. You could even emulate the "upgrade whilst shutting down" behaviour to update Linux underneath. I think you could quickly end up with something that would pass at first glance.
This was attempted once with "Lindows" (later renamed to "Linspire" after the inevitable Microsoft lawsuit). Wikipedia informs me that they're actually still around in one form or another and owned by Xandros these days.
The idea was to capture how actual Windows works, so Wine could implement how Windows actually works, not how you'd think it works just from looking at API docs.
I never personally used Lindows (or any variation of it), but I'm pretty sure you could create an experience that users would find pretty difficult to distinguish between Windows and Linux for the most part.
The key would be making sure everything is redirected through Wine and for the most part the OS does all the maintenance itself. Then it's just a case of wrapping some common utilities with a Windows like layout and it should be good to go.
Could you record and share with us a little video about it? It may help us to promote our project...