The projects have been built starting with the source tree for Linux V2.4.2:

This source tree has been configured ("make menuconfig") to support all the projects. In particular, installable module support is on, and the Minix file system is configured as a module. (Both are necessary for the file system project.)

We have run both on bare hardware and using VMware, a software virtual machine. (We run it on top of Windows 2000, but it runs on other varieties of Windows and Linux as well.) Bare hardware is certainly more exciting, but VMware is more convenient given the practical constraints of our labs. (We have not used it, but User-mode Linux might be an alternative if your base platform runs Linux 2.2.15 or later.)

No matter which way you go, you'll want to take some care to isolate the machines used by the students from your network. We have a page describing our setup (written for our students) from which you should be able to glean how we run: