Joe

There are plenty of tools to write iso images to CD, here is a command line one

http://isorecorder.alexfeinman.com/CreateCD.htm

The xauth problem looks like a problem writing to the file system, there is similar problems norted in the DSL forum from 2006 but they are noted as fixed.

I'm sure you don't want yet another Linux distribution. I'd expect Xubuntu to work in 64MB and the distribution is bang up to date.

http://www.xubuntu.org/

Enjoy

Simon