Some links with linux-based distributions that fit on either one or two floppies.

http://www.confederatelinux.com/linux/floppy.htm

http://www.linuxlinks.com/Distributions/Floppy/

Also try searching on “linux floppy” at the freshmeat site.

http://freshmeat.net/

You may find a need for the RawWrite utility to create disk images on the floppy. Here is a nice Windows version of it.

http://uranus.it.swin.edu.au/~jn/linux/