I would like to know if it is feasible to run Tor in virtual machine with 256 MB of RAM. If so, which flavor of linux minimal enough to run it?
Any distribution which doesn't ship too much rubbish. Don't use a 64-bit OS, because that uses more memory.
Debian can easily run Tor on x86.
But if you wanted a GUI, you are going to have to be patient. Or use Windows XP (although 256M is still pushing it a bit).