How do I create this server? Can the server and the databases be on any machine's hard disk on the network?
This process is pretty easy with Postgresql; just download and install from
here. There's documentation and help resources there for you if you're a command line junkie. There's a GUI front-end for pg that you can use to setup your database quickly and with very minimal effort. And yes, you can install the server/database onto any machine's hard disk but keep in mind that if you need a large database that is always available you'll want to install it on a server (or at least a reliable computer that is always available), preferably with more than plenty of storage.
Also, once the server and databases are created, how is access granted to the server?
You set up user accounts with passwords
In my application I use wxpython as a front-end, but can anyone with a front-end get onto this database server?
wxPython isn't your front-end it's just your GUI toolkit. The front-end would be whatever you use to access the database. Anyone that has a compatible front-end would have access as long as they know a user name/password (can also be open access ie, no pw). When you install pg it comes with a very nice front-end that will allow you quick and easy access to any pg databases. Any body that wants to access your db could install this application.
You could alternately create and distribute a Python program to access the database, which would act as the user's front-end (even though the pg module that you make use of is the means to this end). Or you could simply create a web front-end (I've used PHP to create a db front-end for my workplace which I highly recommend)
Or can only people on the office LAN gain access to this server?
Depends whether your "office LAN" is internal only or if it can be accessed from the outside world.