server set up

Without knowing what you would like to "serve up", you need to pick a software and then read the hardware requirements. Linux will run on just about anything bigger than a phone. Pick a distribution. One note, some of the really easy Linux desktop GUIs have command line only server versions. That being said, you can have a very nice Linux server running with LAMP (Linux, Apache, MySQL, PHP) in an hour or so on a used computer with 2gb of memory.

As long as the user and the server are both attached to the same network, you are fine. A $20 5 port switch would do fine. If you are at home, chances are you have an unused port on your router/DSL/Cable box. Plug into that.

Now, what did you want your server to do?