File server: Once you strip your old PC of any unused applications and delete files that won't be used, your computer will have newfound storage space on its hard drive. This will make it a good place to back up your documents, files, and photos. Add your machine to your home network and you can later retrieve files to your new PC via drag and drop. You can even have the machine perform double-duty as a print server.
Media server: In addition to housing your everyday files, you can use an older PC as a media server. This will prevent you from cluttering your main computer and let you store your music, videos, and other media on one machine that can then be incorporated into your home entertainment system. While you might want to increase your hard drive space, many media server programs, such as Firefly Media Server, will run on older hardware and aggregate your media for you.
Home security workstation: Want your own version of HAL 9000? It might not greet you by name, but with a few webcams and a high-speed Internet connection, you can turn an old computer into a security monitoring system, and even log on to your PC remotely to ensure that your home is safe when you're away. Companies like Swann specialize in cameras and kits, like the Swann USB DVR Guardian ($89.95 at B&H Photo-Video), but budget-minded users can simply pair their current webcam with the right Mac or PC software.
Multiple OS computer: Do you still occasionally use Windows 95 for an old application or DOS for a game that you just can't let go of? Have you been thinking of making the jump to Linux, but don't want to jeopardize your current PC by bungling the install? Well, you can set up an old computer with multiple operating systems and turn that old PC into a digital Rosetta Stone. You'll be able to run all of those older apps, plus you can tool around with programs you'd like to test out before installing them on your new computer.
Internet gateway: If you're worried about protecting your home network, you can set up an unused machine as an Internet gateway. This adds another level of security to your home network, protecting connected computers from any malicious attacks. There are even options for using a Linux gateway (PDF link) to give you added security.
Web server: FaceBook and MySpace may have advanced social networking, but no networking site gives you the same freedom you have from hosting your own Web page. If you have an old PC you can do just that by turning it into a Web server.
— Peter Suciu
¹ - Check out our feature Gadget Recycling Programs: Turn Your e-waste to $$$ for tips on recycling electronics and computer items.