He could install Plex on it, but since it's such an old computer, it may not be powerful enough to play some higher quality video files. He also wants to connect it to his TV using the old VGA port on it. Leo says that VGA is an analog signal, and he can get a VGA to HDMI adapter for it. It won't be cheap though, because it will have to convert it to a digital signal. It would cost over $100, which would be about as much as that netbook is probably worth.
He should check MonoPrice.com and look for a VGA to component cable. Some TVs also have VGA ports, so he might be able to use the TV as he would an external monitor.
Setting up a media server was explained on episode 4 of Know How with Leo Laporte and Iyaz Akhtar.