Small business office network

Sounds good but one problem you may have will be the cost of hardware for upgrading the current Win98 boxes. Depending on their design, WinXP may not run properly, or it may not install at all. I would suggest getting 8 new computers from Dell; roughly around $500/per box. Then, purchase a Cisco PIX 501 ($700) and an 8 port Linksys/Cisco switch ($100). Spend the additional $200 in cabling (straight-through cables and 1 crossover for that PIX-to-Switch setup) and you should be good to go.  

hi, there drmopco

Licensing Issue:
To fix your current problem regarding different OS Win 98/XP you could go with a Terminal based setup on the 2003 SBS server then you will not need to think about the Licensing issue right now.

Hardware

Server:
Like the other suggested SC 420 perhaps

Backup
Dat 72 max 70GB but it is slow
DLT 320 160GB native
LTO 200GB

I would say that whatever future needs could be this could save you moneu in the end getting the right device now. Properly my suggestion would be the DLT as the least.

Router/Switch
here is a problem you did not state how your Internet connection is going to be DSL or other, for a smaller network as yours 1GB connection is what you need for my suggestion on the terminal server.
Dell Power Connect 3024/3424 or similar I know that there are smaller switches but you need one that is manageable.
If you on the other hand think you do not need manageable switch then the Power Connect 2224.


So the only thing missing is the printer and the router as I don't know your printing requirement, and the router I don't know what kind of DSL, frame relay or other possibilities you have in your region.

Cooledit

cooledit - you can't use Terminal Services on 2003 - it does not support Application mode.

Tape based backup is NOT a good idea in this case because of the budget.  Tape based backup will be EXPENSIVE - $1000 at least, when you factor in media.  Better solution 2-3 External hard drives rotated off site and periodically erased - $300-$500.

You can have it cheap, fast, or good.  Pick 2.

Thank you everyone.
I am sorry to get you late.  It sounds very cool, but the problem is money. If we buy a server, I don't think that we have enough money for four more PC's, and upgrade software because they want to upgrade software(he(my co-worker) thinks that we should get out of Win98)with perhaps a site license for 8 machines of new software, at least Win2K. We will use cable in the office. I am not sure what to do. Should I go with a small business server??
Thank you in advance..

You cannot buy Windows 2000 licenses any longer.  Your only license, authorized to be sold by Microsoft, is Windows XP.  And again, on 6 year old machines you could end up spending excessively on such upgrades.  Look at it differently - what PROBLEMS are you having with the 9x machines?  If there are no major issues, hold on to them.  Also, you could look into leasing the computer - which would IN THE LONG TERM cost more, but in the short term cost MUCH less.  The computers (excluding the server) can be $15/month or so from Dell. For $120 month, excluding the server, and probably about $190 month WITH the server, you can get 8 new computers and the server.  Over the course of the first year, that would be LESS than $2300.  It would take about 1.5 years, including the other components I listed (printers, network equipment, etc), to completely use up that $4000.  And you're suggesting a year and a half from now you wouldn't have any more money for this?

Thank you for your fast respond.
leew, the buget is only for short term, we will have more buget in soon, but I am not sure when will be availiable. It depens on how business going. I didn't think about leasing computers, etc, because I heard that sometimes there is some problem with leasing comuters,etc. There is no major issue for Win98 machines, but we thought that it is necessary to upgrade their software to the full potential.

If there's no major issue with the 98 systems, keep using it until you have more money.  If you expect it soon, then there really should be no problem.

So don't lease.  Finance.  You'll pay finance charges, but - unless your in an area that allows "pre-payment penalties" - you can pay it off entirely when you have the rest of the money.  I bought my Dell laptop through Dell Financing this way.  $4,000 laptop (this was 8 years ago, fully loaded) and payed, I think $150-200 a month.