Useless PC as file server?

So I have the piece of crap PC known as the Archos 9.
Never use it anymore because I got a real laptop.

I just bought a WD My passport 1tb hard drive.

So I want to use it as an external network drive.
I would leave my Archos 9 in a corner somewhere with the HD connected,with file sharing.
It is touchscreen and has only a built in mouse.
No keyboard.

How would I be able to set it up?
It overheat sometimes and lags like hell.
Has no Fan which might make it suitable for being in a dark corner

Any OS's that don't strain the system a lot and are not outdated?
I heard of some other OS's that do this really well,with not much power usage.

So can someone get me started

One important thing about network drive is file transfer rate. If you will use a laggy device, forget it. Just create a homegroup within your network. Or get a new router with USB network sharing capability. Most new routers have that feature.

If this helps Windows XP runs without lag.
Windows 7 has some.
It has 1gb of ram.
It has wireless N,so the speed should be there.
The processor is the one thing that is bad.
I could play 1080P MKV no lag.

If do use it,what would be that thing that screws up?
The file transfers would lag,video streaming would lag?
The PC seems adequate at that imo.