GentooXO started life as a small x86 Gentoo virtual machine in Qemu.
Once I had all the packages I thought the system needed, I transferred the image to a flashcard, booted the generic kernel, reconfigured the kernel to be monolithic (with certain exceptions), only using necessary modules. I then rebuilt the entire system with geode optimizations (which the virtual machine did not support).
I chose Gnome because that is what I run on my desktop and while Sugar is interesting, I wanted OLPC users to also have access to a more standard type of user-interface.
I added some games and fun apps. You know, for kids!
To know more about this project, write to me at info@gentooxo.org.