First of all I'd like to start with apologizing since this is probably in the wrong category and might have nothing to do with this site but matter of the fact is that this is by far the most helpful and easy to understand place on the interwebs where I could ask these questions and survive the onslaught.

Namely I have no idea what I'm doing (I have never streamed anything anywhere). But I need to set up a small internet radio station on my server that would play the music that our friends make. The station should have a jukebox playing 24\7 music from the server without any input from my PC but also it should be able to take in live streams recorded on my PC if need be. I'm figuring since the listener base is around 20 people currently i can even stream with some quality intact.

Since so far we've only done podcasts so I reckon there should be a way to listen to those as well, but if simple directory play from server is allowed, those could be dropped right in.

It would be also awesome if there would also be a request system, but that is something for the future.

So anybody out there can help me? Even if it's a link to some other guide that actually tells me what to do (like the steamcast installation guide instead of saying 1. get audio; 2. stream it; 3. ???; 4. profit) and isn't 12 years out of date. These things are hard to find... =(

The best solution for you would be to use Sam Broadcaster. It will also allow you to automate requests and choose when a stream should be playing a live set or just a directory of files. Sam Broadcaster only works in Windows so your server would need to be a Windows server. There are ways to do this with open source software on linux but they are more complicated and require some knowledge of scripting.

That's a damn shame because my server reads:

What about something simpler, like a link starting a player that will play files stored in a server folder? Also, would it simply not play anything if the folder is empty or would it show an error message?

if you want just a simple on demand solution you can check out my juke box mp3 toolbox. http://www.radiotoolbox.com/mp3toolbox/ It's a simple php script that will allow you to stream or serve in a fairly friendly interface a collection of mp3's.