i need help setting up a apache web server with a router installed on the network?

heres my setup.
1 windows 98 gateway
1 dell windows xp
my book world 500gb which is currently plugged into router via ethernet http://westerndigital.com/en/products/products.asp?driveid=278&language=en
netgear wnr834bv2 802.11n router firmware-V2.0.8_2.0.8NA

that is what I have at my disposal. those computers are currently not being used so I can do whatever I want with them
ok, so im trying to start a little business and im currently working on a website. I would like to setup an apache server. I would like to set it up where the dell is the apache web server with linux OS, and the my book world is a connected drive that I could store files onto and access through the site

and also

my school has something like this where they have there web site www.school.com and then they have like 5 servers. I can connect from my mac at home to any one of these servers and drag and drop files. I connect afp://server1.school.com. this in the same sense is what I want to do with my external drive to be able to connect it to my site as a subdomain (worldbook.mysite.com). login with user and pass from any computer (my book world 500gb which is currently plugged into router via ethernet )

so I am asking anyone with any knowledge to please help me.

so basically what I need to know is below
how do I setup the dell with apache as a websever and what linux distro is best for this and where can I get it?
how do I set up the router and the dns thingy?
the my book world is running PAL. idk what that is, I heard people say before to change that. what should I do?
any recomendations?