Most people are currently using Django 1.2. You should not use or learn Django .96 - it's VERY old, and learning to use it won't prepare you for any non-app-engine Django work since things have changed significantly since then.
Django on App Engine is something of a pain, since you lose a lot of the ORM, which is a really nice reason to be working with Django. You also lose the ability to simply drop-in plugins and reusable apps that use any of the Django ORM. Anything with a models.py won't work.
Take a look at google-app-engine-django for help getting a more recent version running.
http://code.google.com/p/google-app-engine-django/
There is work to integrate the GAE storage engine into Django, and several projects have variously working implementations, but I wouldn't expect really good ORM support for a while yet - 1.3 (which is still several months from release) will include hooks that make it easier to write NoSQL backends, but Django probably won't ship with one.
While there are security releases for old versions of Django, you should really be developing using the latest stable version. Major releases of Django have a very strong backwards compatibility promise, so going from 1.2 to 1.3 when it comes out will be pretty seamless.
I strongly encourage you to think long and hard about what precisely App Engine offers your specific application before spending a lot of energy getting things working there. You lose application portability, scaling is still hard, and you don't save money if your application gets popular. App Engine is not a forgiving introductory platform.
For more conversation on this topic, take a look at this question:
http://stackoverflow.com/questions/1934914/
particularly my answer there and the comments on it.