There are quite a few USB audio/midi interfaces from http://www.edirol.com/ that can reduce or eliminate latency. However if you only use the laptop for playback or mixing and not programming/recording then latency isn't a real concern. I like the Yamaha SYXG-50 softsynth over the Roland virtual Sound Canvas but that's my tastes... you can download demos of both and choose for yourself or go with an outboard module.

Also, consider Windows 2000 for an OS instead of XP because it is widely compatible with older Windows music applications. I use it on a laptop with Sonar 2.1, Reason 2.1, Band In A Box v11b, Master Tracks v6.8 and more with no trouble.

Toshiba laptops are pretty good buys these days. You can likely find one under $1000 at http://www.microwarehouse.com that'll serve your purpose. Also, check out the sexy subcompact P-series laptops by Fujitsu that are available from http://www.laptopinc.com/. While they are not the fastest laptops available, they are small, packed with features and would more than handle most MIDI duties.