I would have to agree with Linux as a solution. Get Red Hat or Mandrake, they make it very easy to install and learn.
You can probably get away with a Celeron 500 and Xitami or thttpd. You don't need a fast SCSI drive, just a lot of memory. Also, I would look at Pure-FTP for Linux over ProFTP since they built it with security in mind and it has no exploits to date.
If you go with MS Windows, try Xitami instead of IIS. It also supports acting as an FTP server. As far as licensing is concerned, the 10 limit is on the Microsoft Networking level and if you avoid IIS or anything using Microsoft authentication you don't have to purchase MS Server. It's sad that there's really no difference between the two (workstation and server) and you can convert between them with a simple registry hack (http://www.03am.com/ntswitch.shtml).
Anyways, just make sure that whatever you go with is secure and you can set some bandwidth limits for transfers so spiders or bots or download accelerators are not taking control of your site.