You've no doubt heard of Apache, a very popular web server. If you're serving FTP, vsftpd is the way to go. http://vsftpd.beasts.org/ As far as distro, that depends on how hardened of a system you wan't. If you'll humor my Gentoo fetish for a moment....

You can set a Gentoo system up to squeeze every bit of optimization that the P2 has to offer. All Apache, and whatever other code compiled optimized for your processor. On a P2-300 it'll take a few days to compile but in the end it will be worth it. Also with SCSI disks you could run XFS assuming you'll be running the server on a UPS (battery) backup. Depending on how much mem you have (and if you're likely to get slashdotted) you might wan't to max it out for the chipset and motherboard it has.

I don't fear learning more stuff, but would like a fairly safe and easy entry into the linux world. I do confess that learning to run linux from the command line starts me shakin' a bit.

We'll this part is, initially, unavoidable. You can follow a Gentoo setup through installation of xwindows, and then putter around from a GUI interface but the CLI is your initial "start menu" for Linux.

Start here : http://www.gentoo.org/doc/en/handbook/handbook-x86.xml