wouldn't linux make for a better server?
No. Windows 2000 runs perfectly fine on a Pentium 1, as long as you're patient. Besides, there's nothing magical about Linux that makes it run better on old decrepit hardware than Windows, other than the fact that you can disable and remove components (which you can do on Windows) and run a 'less demanding' windowing system (again, there's BlackBox for Windows, and explorer.exe is plenty fast as it is.) Of course this is assuming you can even get the scanner working in Linux in the first place.
Never mind the fact that he probably won't be able to even get a Linux GUI going on 32 MB of RAM. (Every distro I've seen says you need 64 MB to get X and FluxBox going.) Maybe a really old copy of Slackware (the old "mountain of floppies" days) might, but it would be completely useless.
Try TWAIN acquiring images with another program.
You don't want to put the scanner on a 'server' anywhere, simply due to the fact that you're going to have to hike all the way to it to put the item you want to scan on the unit anyway, then make trips back and forth to scan with the computer, and retrieve the original.
My suggestion? Dual-boot XP, or wait for HP to update the drivers again.