How to turn a hard drive into an NAS?

Plenty of choices there, e.g. this D-Link DNS-323 (2 bays for further expansion)

or the EAGLE Consus series, single SATA drive NAS Enclosures.

and about a gazillion others ... don't be shy, try your preferred search engine and look for 'SATA NAS enclosure'. :)

freeNAS msi wind

I built my own similar to this guide.

• MSI wind nettop single core on newegg.
• 4gb CF flash with embedded freenas. 2 gb ram, 2x300gb drives in raid 1 (mirror)

References

• http://forums.smallnetbuilder.com/showthread.php?t=1768
• http://www.foxhop.net/freeNAS-msi-wind

Although this question has already been answered, I'd like to point out the Windows Home Server machines, from either Acer or HP. They're around the same price as dedicated NAS boxes these days; and in addition to offering all of the same benefits, they're also servers that you can dedicate to other tasks on your network (automated backup of your whole house, for example).

I was looking for a NAS in the not-so-distant past, and settled on one of the MediaSmart servers from HP. Although I bought it before the prices dropped, I'm still quite happy with the machine. You probably would be too.

As far as "turning a hard drive into a NAS," which was your original question... all of the WHS machines allow you to add differently-sized hard drives to them as you like (typically they come with one drive preinstalled, leaving 3 free bays).