Wow, all that for a Distro question
I'd have to instead lead you towards some applications, down a road of mp3 chaos versus ogg theory, and twist down a turnpike of streaming audio versus download and playback, and whisk you away to tropical areas known as Fast/sleek distros...
Here's the path:
Grab a copy of either Debian, Slackware Gentoo or Arch Linux (assuming you've got some Linux Knowledge) and install it. In my example I'll use Slackware because:
a. That's my distro of choice and the one I use most oftenly (though I do have others installed)
b. We'll do it all from source as anyone can "emerge mp3system"
So, we are going to load a nearly bare bones install of the distro, include only those things necessary for a bare bones compiling system (all the development stuff) and of course those things necessary for networking on a LAN with windoze boxen (SAMBA and possibly NFS), Audio related files such as mpg123 and Vorbis Tools, and possibly a web server (apache) if you don't wanna compile that later.
Now head over to www.icecast.org
and install anything that catches your eye relating to your final needs. Be sure to include support for OGG's should you decide to stream those later.
Now back to www.freshmeat.net
for a tool called netjuke This is where the webserver comes in. You can alternatively use all these tools and not worry about the SAMBA bit at all, and instead look into using FTP to transfer the files. BUT, Samba would likely be more efficient, especially for those not up on the greatness (or suckiness depending on my mood) of ftp. This tool is of course, PHP based. You'll wanna be sure to setup your webserver to work with PHP, honestly, it's not that bad, if you can read and follow directions, the www.php.net
site has superb documentation on setting up Apache to work with PHP.
Fat32 won't be a problem at all, nearly all (if not ALL) modern distros will have you covered with that one.
Finally, you seem to want to have the LinuxBox not only be the fileserver, but also the central "player" where you will send files to play them. I'd venture to guess icecast could cover you there, but if not, you may find something on freshmeat in the way of a web-based interface on an mp3 player, controlling of course the server itself (interesting idea). You could, as you mentioned, do it with something like VNC ( TightVNC is the application of the month of http://sf.net
) and have it all bound together in a gui with that, if the web based ideas all fall through, or aren't up to your specs.
You have a lot of options, I'd say primary goal here would be to concentrate on getting the best soundcard you can for:
a. Your money
b. Full support from linux
c. Full support from your primary software target (likely IceCast).
Welcome to LQ
I'd very much like to hear about anything that comes about from your idea, sounds like a great adventure and some fun!