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[K12OSN] Bang For The Buck

I have a dilemma. At my own expense, I have created a 6 node K12LTSP network for my sister's sixth grade class. This fall we would like to go to 10 nodes.

Our server is a 700Mhz Via CPU w/512meg of RAM and an 18Gig Hard Drive. (This is all out of MY pocket!) The rest of our network consists of:

3 old Dell Optiplexes (Pentium 166 MHz) that we were able to purchase refurbished from our local computer store for $29 each!
2 old HP Pavilion 350's (333MHz AMD K6-2's) donated by friends.
1 donated ancient Pentium.
One monitor is a refurbished 15in. Sony that we got for $60!
The other monitors we got from friends who were upgrading to larger monitors.

Here is my question: With a REALLY limited budget, what are my best options for supporting 10 Workstations?

Should I build another server similar to the first and run the 4 new workstations?

If so, how do I make them operate together so that any of the students can log in from any workstation and their work is saved to the same hard drive? (Be specific here  I just started with Linux last summer.)

Should I build a beefier server to support all 10 workstations, and convert our present server to another workstation? Budget will permit maybe an AMD 1900 and a Gig of memory (will that support 10 workstations?)

The additional workstations will come from friends and parents donations.

Our primary applications are Open Office and Mozilla.

How can I get the most bang for my limited buck?

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