Current progress is in hardware,
Instead of two half-broken midi tower machines I got my hands on a nice mini-ATX machine with a 1.3Ghz Celeron (with what seems like 2 throttle modes) and 256MB PC133, floppy and 50x CD-Rom drive sitting on an A-Open MX3-S mainboard, which happens to also have 10/100Mbps Realtek based ethernet on board.
The only minor flaw is a broken CPU fan, it barfed when I left it running overnight and turned it off and on again. Other than that the machine looks fine to me for silent operation.
I've already had the machine running with Knoppix 5, and trialled a server type install with Mandriva 2006.
I'm thinking however although my preference is Mandriva, i'm probably going to require a different distro and a hardened (stripped?) kernel. I remember reading a post somewhere on here about Bastille so i'll have a look at that when I return, and i've read up in C'T Magazine on how chrooting certain services can improve security, so i'm also going to try that.
Not having a lot of room at home makes this small machine an advantage.
Disadvantage is that i'm set for away time this evening and won't be back for at least two weeks, sorry :/