You got the general Idea.
You need a lowish end PC with 200-400MHz CPU
a good Network Card, preferably one that has low CPU load (3Coms and Intels are quite popular)
A IDE100 PCI controller card is not absolutely necessary on boards with IDE33 but recommended
As many Harddrives as you can get! 60Gig drives are popular at the moment for such machines. Most servers I know run WDs, Maxtors or IBMs
The OS varies from server to server but all use FTP and not windows filesharing (security and performance issues). Windows boxes are mostly Win200 Professional with G6-FTP server running, NT4 is common on lower spec machines. Linux is also used by more seasoned users (I have a PowerMac running Linux and doing FTP duties - a friend set it up for me though)