Well, I used Knoppix for my install, so I dunno about the framebuffer thing.
One question: have you tried using LILO instead of GRUB? Because if you set up LILO and that works, then it may be a GRUB issue.
With those specs, you can definitely do it...
If you want some GRUB help, post your menu.lst (I think that's the file, or is it grub.conf?) and the output of:
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