G'day

You might consider an AMD cpu -- tend to be bang for buck.
Not that that is really linux related, just thought I throw
that in.

For the distro to use, I found redhat/fedora easiest to install
and they tend to be close to the cutting edge.  However I'm sure
you'll cope with Debian -- there are plenty of debian users in
slug with advice and help.  Mandrake and Suse would be comparable
to Redhat in terms of features and ease of use.  Often the one
to use is the one your friends run so you can help each other!

As Peter Rundle mentioned, you could use the old machine as a 
gateway/router.  Throw yourself in the deep end!

Good luck,
Matt
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