A while ago, I built an old 386 out of "spare parts" for the purposes of allowing all the computers at home on my network to transparently access the Internet. I thought a 386 running Unix was the absolute lowest-end Intel machine I could use to do this, but someone proved me wrong!
Through talking to fellow users on my ISP, I heard of a program called IPRoute. This is a DOS-based program that will turn your old 286 or 386 into a machine that can be used as a gateway to the Internet for your entire LAN. You can configure IPROUTE to use your standard SLIP or PPP dialup account! It dials it up for you and provides transparent access to the Internet using the IP address assigned to you by your Internet provider.
All IPROUTE requires is at least a 286 processor, a high-density floppy drive (either a 5.25" or a 3.5"), a modem (either internal or external), a copy of DOS 3.3 or later, though they recommend Caldera's OpenDOS, and a network card with a "packet" driver (most network card manufacturers provide this on the driver disks included).
I looked at the configuration of this program and was impressed with the number of configuration options this program allows for, but the setup and configuration is daunting even for a geek like myself. There are several different pages out there that provide some assistance and examples on how to use this program.
IPROUTE is not as flexible a solution as installing Linux or FreeBSD on a 386, but it is perhaps the most "secure". DOS, which IPROUTE runs on top of, was never designed to be networked, so the OS itself has no network-accessable security holes. As long as you've configured IPROUTE correctly (and it's hard *not* to), there should be no way anyone can compromise either your IPROUTE system or any machine on your LAN.
IPROUTE is a far better solution for non-geeks. "Free" operating systems such as FreeBSD or Linux can be used for this purpose, but I have had years of experience with Unix systems and have done network security, so I am aware of many of the issues involved in setting this machine up. With IPROUTE, you only have to do minimal OS configuration and the IPROUTE application itself. You set it and forget it.
IPROUTE is available from Transient Systems for $50. A shareware version is available to try before you buy.
For more information on IPROUTE, go to http://core.transient.net/core/1997/09/iproute/.