There are only a few rules you need to follow if you are building your own box. The most important issues are to make sure the mobo, CPU, and RAM are compatible. In no particular order:
1. The CPU's socket type must be matched to the mobo's socket type
2. The CPU's front-side bus speed (aka FSB) must be compatible with what the mobo can support
3. The RAM speed must be compatible with what the mobo can support
4. Make sure the mobo can support the video card you want to use, meaning that the connector type (PCI, AGP, PCIe) is supported
5. Make sure your system has an adequate number of USB and other slots for your needs
As you've seen there's a huge amount of choices out there, but as long as you observe the above rules you should be OK. OTOH, if you are looking to buy a ready-made system (ie, Dell, HP, etc) then pretty much anything should be OK with Linux. The truth is that most hardware is basically neutral when it comes to which operating system is installed, but where you get into trouble is when certain manufacturers do not support Linux or offer Linux drivers. (See jon23d's comment
Check out the LQ HCL in my sig block for reviews of various individual hardware components.
As for your question about "which distro should I use?" I would encourage you to try several and decide for yourself which one best meets your needs and preferences. Be sure to visit
LQ ISO Good luck with it