Hey, it's 400 GB of capacity and cheap! It's not really fast - small 8 MB cache. So use it for storage of stuff that does not need super-fast performance. Storage and playback of music and videos often is just fine on such a unit, although it probably is not right for editing and encoding video. Or, consider it for a backup unit.
My only concern is reliability. This drive is getting a bit old and you don't seem to know how much use it has had. It MAY be getting toward the end of its life some year soon. For starters, I recommend you download and install on your system the Seagate utility Seatools. Personally, I prefer the "for DOS" version you burn onto a CD, but there are also versions that run under Windows. Use that on the old Seagate drive (make SURE it is that drive only!!) to zero-fill it. That operation forces the drive's own internal board to check absolutely every sector it is using for reliability and replace any questionable ones with hidden "spares". AFTER that you Partition and Format it for regular use.
By the way, my main machine has a pair of 7200.10's, and my external HDD enclosure holds a 7200.9 500 GB unit, 4½ years old now and just fine.
I used to recommend buying an external USB case to use older drives with but you can purchase a 2TB WD Elements USB drive on sale for $100 and some USB drives on sale for as little as $50. Considering a reliable USB case is at least $30 it's hard to recommend.
I agree you should definitely run diagnostics, especially the best ones sometimes called "destructive" testing which overwrites everything but it's the most reliable testing.
Another option is to backup your computer image (Windows 7 has a built-in tool or use Acronis) and other critical backups and simply put it in a storage bag in case of a crash.