This is the system I'm using on my 1996 S500 and it works great.
You're right about needing a decent display... an "active" screen is a necessity in bright sunlight... even then you need to shade it some.
But, you don't need a "newer" laptop... good news is that the data rate from OBD2 is extremely slow... so just about any laptop can run the data and feed the display. It runs fine on a 486.
I'm using a HP OMNIBOOK 800 with active screen. Its several years old (they're easy to find pretty cheap), is much smaller than most laptops at 3 pounds, and is a Pentium 166.
The really cool part is the power requirement for the OMNIBOOK 800 is 12 volts DC... :-)
The cheaper way out is an OMNIBOOK 600CT... the older, 486 version...
The best thing about the software (besides being free!) is that you can scan several functions at the same time... you can even run the O2 sensors plotted against trim all at the same time.