" but not for non-ancient games. " - so it is for ancient games? Just quibbling over the double negative. Also, what is ancient?

Yes, what I am calling "ancient games" would be played on this system (in fact, I recently played through much of Bard's Tale 3 on it).

Basically, what I mean by ancient:
* Game should run on systems without dedicated 3D hardware
* Game should have been released at a time when dedicated 3D hardware was not standard
* Computer games should not require a 32-bit (or 64-bit) system to run, though I might accept 32-bit DOS and early (pre-95) Windows games.
* Console games should be for the SNES (or its contemporaries) or older; once we get into the PSX/N64/Saturn era, we start to see 3D hardware becoming commonplace, not to mention games using optical media rather than cartridges.

Anyway, I ended up buying a Lenove IdeaPad 110s for about $150; it has 4GB of RAM (pretty good for its price, I think) and seems to run well under Linux. For those wondering:

The following games/emulators run well:
* VICE
* OpenMSX
* Wonder Boy: The Dragon's Trap (game requires modern 3D hardware, but it doesn't need to be powerful)
* Undertale (in WINE), though I haven't actually played past naming the character

The following games/emulators have issues:
* MAME, with apple2gs driver: Runs unacceptably slowly (~15%) for some reason. (It works fine on my desktop with cooling issues that I underclocked to 800MHz.)
* Morrowind (in WINE): Performance is decent, but the game plays poorly due to control issues. Game expects you to use keyboard and mouse at the same time, and the trackpad doesn't work while the keyboard is being used (which is fine for other software, but not for this particular game which requires simultaneous keyboard/mouse usage). An external mouse would solve the issue, at the expense of requiring a flat surface, which to me would defeat the purpose of using this computer.

My solution (my laptop has 64GB of storage IIRC, so space isn't quite as tight as in your friend's laptop) is to wipe Windows and install Linux. If you require Windows, get a laptop that has enough storage to accommodate it; if not, just don't bother with Windows and run something else, like Linux. Linux is much smaller, allowing you to use the space for other things and not feel so cramped with storage space.

Thanks for returning with feedback!

Linux.... You are preaching for the already converted :-) Hallelujah! I already suggested several times a change to Linux but that involves a bit of effort so nothing has happened.