These are the steps I used to create my Digital Photo Frame from an older Dell 1150 laptop.
EDIT: thanks for the Feature!
Step 1: Software Overview/Gut the Lappy
Before I did anything, I planned it out. I knew I wanted a fully-functioning laptop on the wall mainly to be used as a DPF.
The software I used for the slideshow was Slickr, a screensaver that downloads pictures of any specified subject, flickr user, or set of photos on the fly. It works really nicely if you put a shortcut to it in the Startup Folder.
I also use TightVNC to connect to it across the network so I can have total control over it when I need to. I also wanted some control over it without VNC, so I also have the touchpad available, but more on that later.
The first thing I did was to really commit to the project and begin dissecting the laptop to see really what I needed. You'll find lots of extraneous plastic and metal brackets, and knowing what's what will help you decide what you need and what you don't.