I'm really a newb when it comes to setting up a personal web server to host your own site (I have never done it before actually, I just know it's possible), but I was wondering that once I do get my PC set up as a server hosting a domain, could I still use the same computer as my personal computer (like use KDE, run apps, etc.). How would I set up my hosts file, as well as my hostname and domainname? Thanks for the help.

Unless you have a particularly slow computer, there is no problem doing both. I run a full set of desktop apps, plus Apache, MySQL, and a handful of other daemons for doing development on my desktop.

You would install the necessary software such as apache, php, mysql etc. If you are on a broadband connection you have an always on connection to the internet. The address of the connection (your IP address) is either static (remains the same all the time which is the ideal) or dynamic (changes periodically). These are assigned by your ISP.
You need to ensure that the router side of your modem/router is forwarding requests on port 80 to your system IP address. You MUST have firewall protection.
If you have a static address then you only need to buy a domain name and then point the domain name at your IP address. The registrar either has a control panel to allow you to do this or you must instruct them to to do this for you. Once done the apache server should be visible using either the IP address or the domain name address.
If your IP address is dynamic then you need to host through a 3rd party like dyndns.org. You will need a script on your server that determines your IP address at defined intervals and then sends the info to dyndns which will then direct requests to your server to the new address.
There are a number of articles on this on the net so try a Google search.