Looks like you don't have the proper display drivers installed, BUT, that doesn't really matter if you're just using it as a server.
If I were you, I'd actually have a go at using the PC "as-is" with Vista on it, and see how it works as a file server, Vista should have slightly better sharing capabilities than XP to be totally honest. It's a bit of a heavy lump of an Operating System, but again, for simply sharing files it's okay.
tl;dr: If Vista works fine, then use it!
As long as Vista physically runs on the machine, then you may as well keep on using it! No point messing if it aint broke!