So, I have never done anything with databases before, so this is a first time venture. I have done some reading, so I think I get the concepts, but once I get going I don't want to find out I overlooked something dumb and have to redo a lot.

Basically we use an excel time sheet, which we want to transfer to a database. The spread sheet template can be seen below:
http://img7.imageshack.us/img7/427/excelj.jpg

I have been reading up on normalization, and it makes sense in their example, but when I try to apply it to this situation I get confused / lost.

I then talked to some friends and they both gave me very different opinions on how to set this up.

Finally, would you recommend Access or MSSQL for this task. I have 0 experience with either.

The image is teeny weeny and I can't read it.

Your choice of tool depends on your requirements. For starters, Access is a self contained RAD tool with an integrated RDBMS. SQL Server is a database only - no user interface. Also, you can combine the two (SQL as the backend, Access as the frontend).

pootle flump ur codings are working excelent.

Sorry, about the link it is fixed now.

I'd recommend buying a standard time sheeting system or at least investigating what is available on existing systems. An off the shelf package will be far cheaper, it will be available immediately and if it goes wrong then you can just pick up the phone. If nothing else, looking at other systems will allow you to list the features you need in your own system. Having zero experience tends to lead to a costly (in all senses of the word) solution.

Yes, but then I don't get to learn anything. Also this is not the most complex task in the world (I hope) so I should be ale to figure it out, and if I can't it isn't a big deal