win 2008 file server for beginner

Hi,

I'm playing with Windows Server 2008.  I'm not familiar with servers.  I don't know the correct terms to use in this question.  

I would like the Windows Server to be a file server (if that's the correct term?).  Meaning, I would like the Windows Server to hold the private directories of the ten users in the lab.

My goal is to have the lab users access a Windows 7 computer.  Then somehow Windows Server will see that and then attach that users private home directory.  That way, all the users personal files will be stored on Windows Server and not on Windows 7.

How do I do this?  Does this mean using Active Directory?  How do you set up the file server?  Does this mean using mapped drives?  Or using a login script?  How do you create a login script?  Is the script kept on the server or on the Windows 7 computers?

Thank you for your time and help.