Answers:

1) There is no "best type of unix". Take your pick. We all have our favorites.

2) FreeBSD... never used it, couldn't offer an opinion, but I've heard both sides on it, both good and bad.

3) My favorite... Mandrake, currently 7.2. Suse is also excellent in my opinion. For starting out, I'd recommend either of these, and I'd recommend buying the distro off the shelf... (it'll run you around 70 US dollars)

4) You cannot run it on a FAT32 partition. Linux/Unix doesn't work with that type of formatting. However, you can set up your machine to dual boot with Win 98. I'm sitting here typing on a machine with that setup right now. With nearly the same specs as yours.

5) Most distros can be downloaded from their producers... Mandrake, FreeBSD, RedHat, SUSE, ... the list goes on. Sun is another place to check into. But, like i said, I'd recommend getting one off the shelf or from an online retailer.. you'll get some manuals and all the software you'll need, plus all source code and tons of other goodies.

Hope that helps... post again if it doesn't.