I've been running slimserver/SqueezeCenter for 2+ years on a Linkstation
HG (128MB RAM, 266MHz PowerPC processor), which is comparable to your
LS. The performance on 7.x is pretty much the same as on 6.5.x.
Scanning is a separate process (since 6.5.0), so it is possible to
listen to music while it is scanning the database, which it couldn't do
in 6.3.x. 

In my experience, the LinkStation works fine for its critical purpose,
which is streaming flacs to multiple SBs around the house. The music
plays just as fast as it does on some brand new Core Duo 3GHz screamer
;o)  Where the LS is slow is on (1) scanning and (2) the web ui.
Scanning time doesn't bother me, because I only do it when I add music
or edit tags, and I can do it in the background. The web ui is slow, so
I tend to use the IR remote or the Controller. In fact, the SB
Controller is a huge advantage for NAS users, because the software is
custom-written for SC, (rather than being a generic http interface),
and because some of the processing requirements for the interface are
transferred from the NAS to the Controller.

Trying to come up with a "very light simple basic server" to feed a
slim client sounds like quite a challenge, but go for it!


-- 
aubuti
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