hello
I think it is better if you a buy a new one(you could a find a decent one in ebay for $250

).You could stick with the old one but you might have compability problems(for example your computer may not support that much ram or it may not support a hard drive with a large capacity)
For a distro a i would go with something like a striped down version of slackware(with fluxbox as my window manager)or you can try Deli linux(its a distro designed for old computers).I would not recommend a distro such as ubuntu because you would need a bigger drive
good luck
