Hmm. Perhaps the "top" command is lumping real and virtual memory together? I find that typing the "free" command in an X-box after starting KDE(v 1.1) reveals that KDE(plus the SuSE 6.0-7.0 OS) uses 63 Mb of Ram. Shortly after boot, of course.
This only leaves 65 Mb free for action. Linux can and does run out of Ram--at least with only 128 Mb on board. Ram is cheap!
If you can't add another 128 Mb, you can get SuSE to release a good chunk of Ram. Just open two LARGE(3-5 Mb) .gif files--then close them. If you're already completely out of Ram, this won't work! It'll just freeze your box. All you need is ~5 Mb of free RAM left before you open the .gif's. Give it a try, it's worth it when Ram is tight!