Everything seems OK there to me, you might like to see what happens without the modem plugged in. It may just be that Mandrake 7.0 is just too old for your modern system
As far as distributions go, I don't know whatever you want - go to the different sites and read about them and then pick one that takes your fancy - SuSE, Mandriva (formely Mandrake), Fedora Core, Mepis, Ubuntu, Kubuntu are some of the more popular ones with beginners. The installers should automatically configure the software for your computer and hold your hand whilst setting it up.
I downloaded Ubuntu just the other day and have been very impressed with it - I threw it into an older computer that I need, but don't actually spend that much time using so couldn't justify spending the time setting up slackware on it which is what my main system runs.