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As NYNOC said, we need some more information to know exactly what you're hoping to do. But as far as an actual server that hosts a website, a server is inherently a computer, and most likely you could build one that would fit your needs. That said, all computers do have their limitations. The specifics needs of your server would depending upon the applications you intend to run, and your estimated traffic volumes.
As far as hosting it, colocating your server would probably be the most efficient course of action. Your ability to host it in house depends primarily on your connection, and your knowledge of everything involved. It's possible to host a small traffic server, possibly for gaming, small static websites, voip (TeamSpeak, etc), or spidering from a residential connection.
Beyond minor uses, however, you soon run into bottlenecks and interruptions.
Hope this helps!
Chad
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