If memory serves, you should be able to Play MP3s with a 300 PII. IBM made a laptop called the 600 that was perfect for this type of application. Has a 13.3 LCD and was a very good platform. If you used a Linux distro, you could get a very small OS installed and then have all the rest of the space for MP3 storage.
Something to keep in mind though, is with spinning media, you have the chance of the head hitting the platter. So either get a good mounting bracket that allows for a floating surface or keep extra HDDs near at hand...
Portable players work well cause they are small and have little mass, but with a laptop, the mass is the enemy cause even a small fall or bounce carries a great deal more force...
The displays are pretty simple to change over to a standard plug type, but you have to add in a power converter and get the wiring right for that or you risk a little blowout...