If you are looking for another alternative to Microsoft’s Notepad, you might want to try Alexander Davidson’s metapad. It’s a very small and easy to use replacement for Notepad.exe, and it even has the option of setting up a primary and secondary font.
For a while I had been using Notepad2, but metapad is faster and smaller, so it makes a better replacement for Notepad than Notepad2. Metapad is also free to use and I have not had any problems with it on Windows2003 or XP.
Download metapad.
I have used Metapad for quite a while. Feature rich and as you mention very compact. Try the transparent mode for debuggin, really nice. You may also want to try codepad