How difficult is it to host a web site at home?

It should be fairly simple.  What Operating system are you running?  I'm assuming it is Professional.  I don't think professional has the necessary tools with the OS, but Server editions do.  You will need a separate software to host the website.  If you have server, you should make sure you have the latest updates and enable the IIS.  You will also need to register your site with a dns and it will need to be a static IP address.  If it is not static, you will not be able to do it.  

For a single web site, you can do with Pro also. IIS is included in all versions.

Note, however, that this only works for a very low-traffic web site or your line will be jammed. Also make sure that your ISP contract does not forbid the use of the connection for server (WWW/FTP/Mail) services. Many do forbid this for obvious reasons.

I only have the Microsoft Windows 2000 that comes standard with my IBM laptop.  Does that apply to what you are talking about Avon?

As far as the staic and dynamic IPs go, I found a service that takes care of that if my IP was dynamic.  In my case it is.  That service is http://www.tzo.com/

The IIS that comes with Windows 2000 Professional limits the connections to 10.

That's correct, however more connects on a "slow" cable connect (upstream is slower than downstream!) would not make much sense anyways. Note that I specifically said that it would work for a low-traffic site only.