Thanks to this question shared to the MoodleMayhem email list....
Source: Email from anonymized source (feel free to identify yourself in the comments)A few responses were forthcoming that actually helped solve the problem:
In our place- africa that is still a laptop with acceptable. To answer your question it will run the Moodle i have done itJoin MoodleMayhem.org email list or hang out on Facebook in the MoodleMayhemGroup!
I want to say it's the RAM but hate for you to base a purchase decision on my recommendation for more RAM. That said, if you don't have other options--like a newer machine--then load up the RAM.
I'd say your issue is RAM more than anything else. Moodle recommends 50MB of RAM for each concurrent session. At 512MB, once you take away the RAM used by the OS itself, you're looking at 300-ish MB left over for Moodle. That fits with what you're seeing; more than 6 users and you run out of resources.
that's a very clear/concise stat (one that I had not heard before). I did a little digging, here's the page of origin: http://docs.moodle.org/en/Installing_Moodle#Hardware
Thanks for sharing that! very useful in trying to ascertain the costs of a Moodle setup for anyone using a service like Rackspacecloud.com.
Well, I bit the bullet and ordered the RAM. Two GB for $40. I hope that does it. Crucial.com says it will take 2 GB. I hope they're right!
I got the RAM installed and tested out with my kids today. I was able to handle 28 kids no problem! Thanks for all the help.