I just installed SP3 for Windows XP on my wife's EeePC and we were down to 19MB of space left on the SSD. She also has an 8GB SDHC with her Documents and Settings folder on it.
These are more or less the instructions I used to install XP Pro
It is suggested that you turn off the page file altogether if you can. For some reason, even if I try to turn the page file on on the SDHC, it still creates a page file on the SSD and uses up all of the free space. Also, if you turn off the page file, make sure that the pagefile.sys is deleted from the root filesystem. I found that even though I had disabled it, the 2GB file still remained and was hogging up all the remaining space.
I followed these instructions to move the TEMP directory over to the SDHC as well as some of the Program Files and Windows Update files. It also talks about how to make XP think that your SDHC is a fixed local disk and not a removeable media.
These are the instructions for moving the Documents and Settings folder onto the SDHC.