Ok, here is an update.
I decided to go with Ubuntu and downloaded netbook remix. It has a very useful tool that installs ubuntu from within Windows.
Anyway, windows side of installation went smoothly.
I had to restart the machine to continue installing. And I did.
I selected ubuntu at the boot selection, it continued installing in a nice GUI. No problems. Installation finished and restarted the machine.
Same boot selection menu, selected ubuntu again but now, it takes me a DOS like screen with grup> prompt.
I guess it expects me to write something, but what?