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Probably any Linux will do the job. Pick the one you will feel the most comfortable with. I could recommend OpenWRT. It's designated to be used on routers and other network devices. It's very light and simplifies many things such as installing and configuring web server, OpenVPN or SSH server. But as I said, your best choice is to pick the distribution you like. If used Linux 15 years ago you are basically a new kid on the block again and need to make a decision basing on reading other people's stories and your preferences.
Use CentOS. Surveys show CentOS and Debian Stable are the most popular web-server distros, and in my opinion CentOS is easier. And even after all this time, some of your Red Hat memories will be useful. Get the full 2 DVD set, not one of the single disks. That will give you the option as to what type of setup to create, and "web server" is one of the choices.
This computer is of similar age and size to the one you have and CentOS, even in the GUI version, works perfectly.
On an old piece of hardware like that, be sure to take regular back-ups. You never know when you're going to suffer a failure and have to swap in a new machine. Actually this is good advice on ALL hardware.
Make sure you stay up to date on security patches and the like -- fortunately with CentOS 6 this is easy -- just run "yum update" periodically.
In addition to B T Millers's advice on backups, I'd add the point that you need to make sure that SMART is enabled in the BIOS, and then do regular checks. A web-server's life is hard on the HD, and yours is not getting any younger!
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