I dipped my toe into the Apple pool around a year ago, when I picked up an old Mini. It has an onboard 80GB drive, the Superdrive, Bluetooth and wifi. I have attached a pic of the specs below. It is running Mac OSX 10.4.11. Not sure if the old beast can be updated with a newer OS that might help?

Since, the family has bought a bunch of iOS devices, and I continue to want to use a server (I used to use a Bolder modded Logitech SB3 with a PC stashed away from the listening area.
There is one Gen 3 iTouch, one iPhone 4s, and 2nd Gen iPad around the house now. But I remain the sole user of the Mini.
It lives down in the basement pool room, and is currently connected to a 1TB drive for my music collection (has been converted from FLAC to ALAC). I am using a Ha Info usb converter to connect to my receiver with a toslink.
I have a wireless mouse attached to the Mini, but no keyboard - that part of the wireless desktop died. I have access to a usb keyboard, but don't want to use that much, as it really clutters up the stereo space to have a keyboard around. I am happy to connect one to go through a setup to get the system doing what I want, but longer term don't want one attached. I do have a monitor attached, it is mounted on a bookshelf near the system, so I am not running headless.
The system is not for critical listening, it is for playing tunes in the basement while playing pool, or working down there. It is an old JVC ES-1 receiver, a pair of Mirage Omni 60 standmounts, and a DIY sub.
I have not been able to successfully get iTunes up and running on the Mini, with my external drive full of music.
I wish I could use Slimserver type server s/w and iPeng, but another issue is that Logitech Server s/w cannot be sent over the USB connection. This is well documented in the Slimserver forums.
So, I am using Play (a free iTunes alternative). It is not good for building playlists, and is not easy to control remotely with any App I have found.
What I want:
1 - to use my stored 1TB of music
2 - to use my Ha Info usb converter to connect the Mini to the receiver - ie not looking to buy a streaming device
3 - a free solution! Go figure, I want to contain the costs
4 - a remote app that can control whatever s/w the music is being controlled by with the Mini. I expect to use the iTouch for this. I already own iPeng and Touchpad for it.
Ideas?