Hi Dave
I recommend keeping your 1200 in the desktop case. It looks much better than a cumbersome tower kit that always seem like a bit of a bodge to me unless you go down the PowerPC route with OS4.0 and all that. But I would recommend OS3.9 which you do need a CD drive to install it from unless you install 3.1 with your hard drive in the mig and then take out the hard drive and piggy back to a PC and then you can use WinUAE to install OS3.9 with the PC CD drive but that may be a bit fiddly for an Amiga newbie.