3GHz P4 is overkill for a proxy server! Even a P166 works, provided you give it a nice chunk of RAM.
What I don't like about Smoothwall is that it is not very extendible.
eugh. Smoothwall.
Build it yourself:
Hardened Gentoo + iptables.
As for mail, use postfix (sendmail is outdated and crappy), and possibly fetchmail to have the server automatically collect all external mail as well.
I've set up a few Gentoo servers as firewall/proxy/mail/dns/file servers and it is not that hard.
I've only used qmail for serving email.
Here is a nice howto which includes support for IMAP (Courier-IMAP), webmail (Horde) and virus scanning (ClamAV).
Squid could be used as a caching proxy server, to speed up (or slow down if you want to - DelayPools) internet access. You could use AdZapper to remove some advertising. If you are worried about people accessing websites they shouldn't, you could install
Dansguardian. It has different types of blocking that you could enable/disable to for instance allow p0rn but block sites of a violent nature.
I usually use the arno-iptables-firewall package for the firewall, dnsmasq for DHCP/DNS and Samba for windows file sharing.
If you don't want to install this on the PC, you could always install it inside VirtualBox and then dd (copy) to a physical partition later on, should you decide to keep it.
Even though I've done this many times, it would probably take me a weekend to get a system like this up. If you don't have the time, don't bother. There are a few Gentoo users on this forum and the
Gentoo community is always helpful.