skiflyer: no, there's at least six different answers ;-)
1.2GB hard drive is pretty small, but can get you by. My 166MHz, 56MB RAM laptop running Debian only has 312MB of space used for the system itself, the rest is /home. It only serves as the gateway for my LAN, so it's got very little GUI stuff installed.
I say install Linux (any distro), cuss, fuss, reinstall, repeat, etc. Get to where you can get on the internet with it. Then download some MuD source code. Spend a few weeks tinkering with C and modifying the MuD. Give up, start working on PHP+MySQL+Apache. Do a blog-ish set of scripts with a MySQL backend. Then push your Linux box off in the corner and use it as a fileserver.... That should give you a good set of skills, wow your friends, and intimidate your boss' IT guy ;-)
Well, that's my story anyway. Didn't start with MuDs (actually started writing 'chat' scripts for 'ppp' with my 10lb Learning Linux: Second Edition book). Got me this far ;-)
Oh, and learn to use your ;-) effectively. By the way, the post is a bit tongue-in-cheek, but honestly, those little activies really boosted my knowledge of the OS. Getting the compiler to jive with extra libraries, headers, etc. Learning why stuff breaks, and even fix them. Shoot, a way-back-when, I broke out the source code for gnome-panel and changed the pixel-height on the icons so they'd be reasonable on my little laptop screen (it was a simple #DEFINE to change, but hey, I had to do a lot of 'grep's to find it ;-) ).
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JBR