Hardware and performance

Windows 2003 Web would be enough for hosting Moodle. You don't really need Standard for webhosting unless you want to use Sql server or Exchange, or when you have a server with really big specs.

What linux version to use is mainly determined by the knowledge of the system administrator. There are a few distributions used a lot for hosting but you could basicly use anything you like, unless it's really targeted at desktop usage, like Ubuntu and Knoppix.