I'm thinking of creating my own distro as a school project. How do I start?

Currently contemplating should I make it based on a distro or standalone?

Look at Linux From Scratch of one of the tools that lets you rip Debian into something new.

http://www.linuxfromscratch.org/

https://www.linux-live.org/

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should I make it based on a distro or standalone?

Depends on the purpose of your project.

If you want to learn about the internal components of a Linux system, you’re not going to find a better starting point than Linux From Scratch. It has nothing you don’t put in yourself.

http://www.linuxfromscratch.org/lfs/

If you’re trying to make something that other people will use (as in a classroom demo), giving people the option to install a variety of packages is handy. Debian or Ubuntu base would be recommended there, with honorable mention going to Fedora.

If you’re focusing specifically on the subject of software build, package, and distribution, FreeBSD is worth considering.

Their Poudriere build tool is nifty, and is designed for people who run their own infrastructures, which all distro maintainers must.

https://www.freebsd.org/doc/handbook/ports-poudriere.html

I do want to install it using a live system on my laptop which I will use to present it.

For someone wanting to do their own quick respin there are tools out there like Systemback and Refracta Snapshot which can basically make a live distro out of your current system. You can use a minimal installation of your distro of choice and customizie it as you see fit.

The only problem with this is when you try to redistribute one of these if they come with artwork (like wallpapers) that you aren’t licensed to redistribute.

Why not collaborate on younger distros in need of more devs? DraugerOS comes to mind as well as Feren OS?