I know that you can definitely use software, I have done it at my office, 1 nic is for the modem and 1 nic for the internal network, each having totally different settings. Proxy software handles the traffic and firewall between. A hardware router is another possibility, it all depends on where you want to spend money, what you are allowed to do on your network, etc, and what you have the ability to setup.
My only caveats with using software like I did, are:
a) The 2 different ISP's (cable then DSL) I used in my area really got 'defensive' about giving any tech support once they knew I had the software, and pretty much blamed all problems with connectivity on it.
b) The software can be really expensive depending on how many users are allowed simultaneously.
c) Its just one more thing on your to-do list keeping the software current and running right.
Many people I know have gone hardware, and seem to like it, especially now that you can get multiport hub/switches with built in firewall (or NAT) that are pretty simple to set up and are designed for xDSL and Cable users. You just have to find out if they support the protocol your ISP is using. I would likely go hardware myself in hindsight, but it wasn't available for the price when I bought the software, since the s/w ran on a PC I already had.
I'm no network expert either, but this is what I've found from hands on use.
BTW - you bet you can expose your network by using a hub and the modem in the Uplink port. Especially with the infrastructure Cable uses, groups of users being 'hubbed' in the first place. Whoever runs the W2K server would likely go ape if they saw a hub setup like that.
You may be restricted to software, since a h/w box will likely want to do DNS also, so you would have problems with server's DNS. Check the various Proxy software sites and see if they will take DNS on the "internal" side I'm sure they will.
Hope I was helpful
Ray