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For distro I’d recommend God’s Chosen Stock Debian. You want prioritize smooth upgrade paths from one major version to another since the server should last a long ass time, and Debian is that. Debian has the eyes on it to make it chill and if there are things to do they’re caught and noted (and more often something is set up to just do it for you).
So no, distro doesn’t matter as long as you can get your software going. But you’re not going to beat the insane stability of Debian. Any OS based on it is just an echo, which may even involve custom kernels which add more work for the specific distro maintainers and may slow critical security updates.
I run no GUI but you can def have one. I just SSH in. I do everything in containers (Docker 1st and I’m moving to Podman - but Podman is too heavy a lift to start, Docker compose files are always right there, use em) and LXC containers run by Incus (it has a web gui as well!).
I’ve been looking at “games on whales” https://games-on-whales.github.io/ to stream games from a beefy server to weaker computers and tablets. Might be a good route for your games without having to directly game on the server.
I have a 4 core 7th gen Intel CPU and it seems fine with doing x265 transcoding on multiple streams, but I’ve never tried finding out how many 4K ones it can do at once. I have 32 GB of RAM (I bought cheapo laptop RAM before the true AI shitshow, praise be, stuck them in with a DIMM board cooked up by China). I had 16 before that, and it was fine. But I just kept adding services.
An LLM will eat your RAM, you’d want 32 GB to be able to run a 16 GB one. But a GPU will be much, much faster. LLMs are just matrix math - that’s why they’ll never be able to think for real - and GPUs are sicko good at that kinda math (cause screens are a matrix!). I don’t fuck with LLMs though, no ethics in that whole shitshow.
Good luck!