Using old PC laptop as basic media server

[HoosPhotog]

This is a total newbie question, and apologies if this is redundant, but I couldn't find anything too similar via search, so:

I have an old Dell laptop from before I made the glorious, glorious switch to Macs. Rather than have it collect dust on my shelf, I want to use it as a basic media server for my apartment, perhaps with FreeNas. I want to get people's impressions of that OS running on legacy hardware, and have a few questions. My usage scenario, as I imagine it, would be:

Devices served:
-My 2010 MBP (running Lion)
-Roommates 2010 MBA (Snow Leopard)
-PS3 connected to home theater

What I want to do:
-Stream iTunes media to all devices (especially movies to PS3). I have Handbrake/VLC and am starting to rip my DVD collection/partially waiting to have a server to stream from.
-Allow Time Machine backup to the server from both Macs (into separate, size-managed partitions), if possible
-Store remote-accessable copies of my photography archive/other files
-Some other super-awesome server capabilities

Specs of Potential Server machine:
-Dell Latitude D620 (bought in 2007), Vista (have a copy of Windows 7 though)
-Intel Core 2 Duo 2.00 GHz
-2 GB RAM
-120GB HDD

If I decide to move forward with this, I will take out the removable optical drive and replace it with a cheap HDD caddy and a 1 TB drive (and maybe swap the 120gb drive for another 1 TB, if it is even compatible). Also expand storage via USB external drives as needed (I'm not going for ultimate performance here).

What I really want to know is:
-Will this hardware support my usage scenario?
-Will USB-connected external storage on the server be a problem?
-What is the best OS for this? Since the system is old, I am willing to experiment a bit and have started looking into FreeNas, but I want to hear people's experiences on running that on something other than dedicated NAS hardware.
-Am I missing something here? I want to make sure I take the easiest, most direct path possible, given the constraints of the older hardware.

Any thoughts/suggestions/etc. are much appreciated! Thanks!

 

[glutenenvy]

Odd things occasionally happen to time machine backups over the network. I haven't been able to pinpoint what happens exactly but hanging a hard disk off of an airport for backup eventually had to be formatted. Same thing happened to to a hard drive off of snow leopard server used for time machine backups. I suggest that your backups are to a locally attached external disk.

I would also suggest that you focus your system on one thing instead of everything all in one basket. You appear to want backups and a media server. Generally a backup should be separate from everything else.

For your windows media server I would suggest xp or 7. On this server you will have windows media player. This can serve dlna (play-station and newer TVs and such). If you need real time transcoding for served media, instead of using windows media player use serviio. Serviio for windows was the only dlna server I could find that works with my Sony blu-ray and TV.

Install iTunes and make sure that 'Copy to iTunes library' is turned off so you don't duplicate your entire library. Copy your library to iTunes and enable sharing.

FreeNas is more for file sharing. Plugins that enable media sharing for operating systems like freenas come out slowly compared to updates for itunes, windows, and media player.