I've been testing out a few dozen of the LiveCD distros, mainly because I don't have to dedicate a HD until I chose one, and found some good ones.
My main angle on this, is that I am looking for a Linux distro that I can persuade an ordinary non-techie Windows user to try. So I have been concentrating on the Desktop versions. It has to look and feel like Windows as much as possible, so to make it comfortable to this type of user. They don't want to be thrown into a completely unfamiliar operating system, and certainly don't want to learn Linux (well.... not yet), but wouldn't mind seeing what it can do. So it has to be simple to use, no learning curve, just plug it in and play with it, no installing options either, please.
Difficult constraints, but some of them fit the bill (no pun) quite well. None better than about 85% so far. Some are getting close, but in my view, are a year or so away from the ideal.
Try testing some out, many good ones are in FrozenTech's LiveCD List
http://tinyurl.com/jhp9y
I have been mainly looking at the smaller size distros so far, but have now started on some of the larger ones (max 700MB - one CD).
So far Puppy comes out on top, Knoppix 2nd, but recently some of the larger ones are looking good, Ubuntu 6.06 did well,...... but I am still testing (VectorLinux 5.1 is the latest under my microscope).
Hope that helps with the Linux question, have a happy time downloading and testing a few. A few years ago, Linux Desktop was out of the question, but now.... some of these guys are almost there, well worth a look at.
Can't help with the hardware options sorry, I am a systems guy, can't help with supplies either, I live in Scotland.
Question: Is your target customer a current windows user - upgrading his machine, that you hope to persuade to Linux, if not you will supply M$ if asked, or is the customer brand new to the market (hence not contaminated by Windows)?