The only catch is that I would like the
data to be encrypted
Since this is Linux look at dm-crypt, or truecrypt.
dm-crypt or truecrypt, will anyone
with access to the filesystem be able
to access the data ?
This depends on what you mean by anyone and access. If you haven't stored your keys on the box and some evil person steals the the computer or the drive, the encrypted data is going to be unreadable. If the system is left on and the encrypted filesystem is left mounted, and a person is able to login to the system with an account that has permissions on the files then then yes, they will be able to access the data. If you control access correctly, the nobody but authorized users should be able to access the data.
The data needs to be encrypted on the
file server but mountable on the other
linux server via NFS or some other
How the data is encrypted on the server is generally unrelated to how you serve it. Keep in mind that most file serving protocols you will use will not be encrypted, so people will be able to see your files as they are used over the network unless you do something to encrypt them in transit. You could use something like IPSEC, a VPN between the hosts, or sshfs.