Print / Download Server

If you have a basic non-networked printer, you could set up a print server so that you can take out copies from anywhere in the house without walking over to the printer and connecting the cables.

And if you're the sort who loves torrent downloads, you designate this PC to act as your download server. Just set up the popular and free uTorrent BitTorrent client and use its WebUI to manage your download from any other device.

Broadband Gateway

The more tech-savy could convert and old PC into a gateway between the broadband connection and the rest of the network. It can perform functions like cacheing frequently used webpages, thus reducing the number of requests a connection makes to the actual servers on the internet and so speed up the internet experience

Home Media Server

Even if your desktop has an aged processor and not much memory, it can do a fine job as a home media server, serving up your video files to a Sony PlayStation3 or Wi-Fi or hosting your large music collections ready to be accessed by any PC around the house. You'll obviously need a network card, preferably Wi-Fi to connect to your home network, and Windows XP. For sharing your media, there are a number of choices, but I'd recommend Apple iTunes - It's free and has a good industry support. Once you download and install the app from the iTunes.com, all you have to do is add you music and videos to the library, and then set up sharing under the Edit >> Preferences section.  This sets up you library to be available over your home network.  Also if this is close enough to your stereo system, you can run an audio cable and have an MP3 jukebox close at hand too.