There were so many edge cases on Windows and Linux at the time that Linspire sailed right past with nary an issue.
It felt like there was a small "window" of opportunity where a competitor to MS might have been able to gain some traction. On those low end computers the "Windows tax" could amount to a large percentage of the overall cost.
Sadly I think Lindows was just a little too late to the table. People were already used to the proprietary software they had, and OpenOffice was new and junky - a tough sell for people used to the MS suite. IE was also dominant, and the browser situation on Linux was a real problem due to ActiveX and other IE-only things that kept kicking around for years.
I also think the "Lindows" name did it no favors with those of us who already ran Linux. I remember reading about it on slashdot, but I mostly discounted it for my own use because of the branding.
On the other side of the dot-com bust there were a lot of hard things that the team achieved even if the adoption never hit.
For example, a $199 PC sold at Walmart was notable for the time. It offered a working desktop with a full productivity suite from first boot. Without opening terminal, updating a repo, dealing with sound card or video card driver issues, etc.