PII 266? I'd dump the second processor and go with straight DOS if you can... I'm running a Celeron 333 with DOS ( because I don't want to give up any of my fast computers to the basement ) and I like DOS because you can tweak the ever living sh|t out of it and get the most bang for the least overhead... Windows'll just get in the way if you're looking to get speed out of that box...
If you're looking for the networking and other stuff that Windows gives you, you might consider a dual boot with something like System Commander, like I did.
I wonder if, since Mame is being programmed for Windows now if the DOS port is losing some optimizations... I'll have to test that.
- Mameham, the first Mame cabinet