It should be possible to install on a 128MB RAM machine. But it will take forever
It is a bit of work, but you can try this:
(I am assuming you have some knowledge of Linux)
1 - Stop all unnecessary services. This will include bluetooth, cron, power management, CUPS, etc to free up some RAM. The command to run is:
$ sudo /etc/init.d/<name of service> stop
2 - Stop any user-run applications. Have a look at ~/fluxbox/startup to see what is started by default and kill those. This should free more RAM.
3 - Start up the Partition Manager. If you have to install it, you can install Gparted. The command line tool 'fdisk' is already installed.
4 - Create a swap partition however big you want to have it. You can create the other partitions now also.
5 - Enable the swap partition.
$ sudo swapon /dev/sda<number of the partition>
6 - Start the installer and on the partitioning step, do manual partitioning. Proceed as usual.
Hope it works.