Yeah....40mb isn't a lot, though for 95 it's fine, you can run Windows 2000, but not XP.
Also, your laptop is maxed out at 40mb, you can't add anymore unfortunately. I would recommend replacing the harddrive with a bigger one (atleast 4gb) and install Windows 2000 Professional, which requires a minimum of 32mb ram. Windows 2000 is still supported by Microsoft and is secure. Windows 2000, with AVG Antivirus Free EDT, Spybot S&D, and ZoneAlarm, should keep you fairly secure. You can get laptop drives really cheap on ebay

If you really do want to use this with Win95, Avast Antivirus is free and windows 95 compatible: Free antivirus - avast! 4 Home Edition

Out of curiosity, is this your laptop? (See Attachment)
If so then it only has a 100mhz processor and therefore can't run Windows 2000 either

Exactly!

I tried running Windows 2000 on the old box over there with 133 MHz and 80 MB RAM, and it got me nowhere. Installing AVG only crashed it.

Then it can't run Windows 2000, the most recent version of Windows you can run is 98, I'd recommend upgrading to Windows 98 Second Edition, which can be bought off ebay cheap, then install Avast Antivirus, ZoneAlarm, and Firefox, this should keep you somewhat secure.
What you could also so is go on ebay and buy a 133mhz laptop and put W2000 on it or for XP, the minimum specs are 266mhz and 64mb ram, which can also be bought cheaply...if you're not doing much on it than a low spec machine should do the job, I run XP Home on my laptop at 366mhz with 192mb ram just fine.

oh, just wondering, what about opera, if not, ff3?