Re: Linux which one
Try a couple of LiveCD's and see what takes your fancy.
Distros I have used -
Fedora (more cutting edge than RHEL/Centos)
RHEL / Centos - mainstream 'corporate' Linux (if Linux can be mainstream)
OpenSUSE - imo easier to work with than Fedora, but still flexible
SLES - enterprise server version of Suse
Ubuntu - too tightly packaged for my liking
I would suggest looking at OpenSUSE and Fedora/Centos first.
The keyboard / mouse should work with most recent distros, with a possible question against the server versions.
Also need to think about which window manager - most come with Gnome as default, but KDE is more 'windoze-like'. If the machine is up to spec you could try Compiz Fusion (3d effects etc).
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