Hardware should not a big issue anymore. As long as you don’t have the latest top notch stuff, you should be fine. This stuff is hardly available in TW anyway. They seem a little bit behind. A modern distribution is also easy to install. If you take something like Suse or Red Hat, probably even Ubuntu it should be as easy and smoothly as windows. Unless you have something really exotic in you machine. I was suprised the other day. A colleague gave me his PowerPoint wireless controller. I plugged in the USB dongle, and everything just work without any hassle in OpenOffice Impress. I was really impressed. .xls and .doc files can be opened with OpenOffice as well, but you might run into some formating problems since the M$ file formats are proprietory and the import filter are developed by reverse engineering. Kontact is a great PIM software, and a good and full replacement for Outlook. Although, I have never open Outlook in my live. If you run into problems with Linux software and your existing documents, you can always use Wine and install your favorite Windows software as people suggested earlier. To give Linux a try without hassle and to see if it works on your machine, try out one of the Live CDs available. I regularly use Knoppix. It is as easy as downloading a CD image, burning the CD and booting from it. Done, your Linux should boot into KDE and nothing will be installed on your HDD. You can play around with it, see if you documents work etc. But bear in mind, it is running from a CD so you cannot compare execution speed with your Windows that boots from HDD. If you have more questions, let me know, I can send you some links.
What the heck, here is the knoppix link
Have fun with it.