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Is it true that I can't use the win2k dual boot function to install it? >>
If you already have Win2K installed and then proceed with the Linux Mandrake install, it will default to the Linux LiLo boot loader. But this can be altered. Personally, I like LiLo...
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Does the regular downloadable version have server capabilities(i.e. can I assign rights and such)? >>
Yes, during the install you will have several options on what you DO and DON'T want (server, FTP, ect.. are some of the options). You will even have an option on what level of security you want.
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Is it easy to install? (when searching, I see a lot of problems, which appears quite discouraging) >>
I originally had Mandrake 7.2 and just the other night formatted and did a clean install on Mandrake 8.0. The installation is just as or easier than a Windows install (as long as your hardware is supported). The install will configure all your hardware before you are finished with the install. There is a lot of supported drivers already included in the install!
As for the problems you are hearing about... I will says it's mostly due to the people that even have a hard time with Windows. While Mandrake is a simple to install, it still requires a skilled user when an obstacle appears (especially if you plan on maintaining it for use as a "web server"

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At this time I am having problems with 8.0 in getting online reliably. There is something thats not right and can't put my finger on it... (never had this with Mandrake 7.2)