1) Will all of my hardware work in Linux?
The best way to find out is by checking a hardware compatibility list, which you could find at
this site or at
Redhat.
4) Sorry for sounding stupid, Does Linux have the same capabilities as Windows?
No need to be sorry, it is a very good question and one which you'll need to have answered based on what you do. If you like desktops, icons, menus, and a highly polished graphical environment, Linux might not be right for you. There are some terrific efforts making great strides toward providing these things, but you might not find them suitable for your needs. I can say unequivocally that Linux will not offer you the same gaming capabilities as Windows. If you are into programming, it's my opinion that Linux offers vastly superior possibilities for software development in some respects. If you like tinkering with the performance of your system and/or doing lots of networking or administration, I also believe Linux is more powerful--IF you know what you're doing.
5) Which version (Mandrake, Red Hat, etc) is the best to start with?
At this point, I part company with the other posters who offered you suggestions. Mandrake is probably ok, Redhat is probably ok, but to me the most important thing to choose when you decide to start out with Linux (or any flavor of Unix, for that matter) is how much time you want to spend with it and how badly you want to become proficient. I have had seemingly countless friends tell me they want to install Linux and try it out, only to go crawling (my term...LOL) back to Winders after a couple of weeks because they lost interest. At times, figuring out how to do something or fix something can be difficult. When I started 3+ years ago, I went all out--removed Winders entirely and forced myself to learn everything on my own, but that's because I was willing to put up with some difficulties. Luckily, I also had some experience with NeXTStep, IRIX, and Digital's OSF/1 to fall back on. I read man pages, I got a little (actually very little) advice from fellow geeks, I relied heavily on the Linux Documentation Project (now at
http://www.linuxdoc.org). I poked through scripts on my system trying to figure out what they did. I compiled things. There have been things that have made me want to pull my hair out, but on balance, there's no way I'll ever go back to Winders. When I have to use my machine at work (we are a Winders-only shop), I can literally FEEL myself become less productive--but thank God for
Cygwin.
But those kind of things might be far beyond what you want to do. I'm not trying to discourage you...not at all. I suggest you try it out, with whatever distribution you feel like. If you can make it over the peak of whatever learning curve fits your needs, I think you'll be happy you tried it. Someday you too could enjoy the email nirvana created by the combination of mutt and procmail, impress your friends by connecting remotely to your X server by tunneling through SSH, or compile the latest nightly builds of Mozilla.

Best of luck!