You can get lovefilm streaming, but you’ll need a Xbox Live Gold account (about £60 per year), but it’s only £4.99 a month for Lovefilm. Once you’ve sussed out the bizarre menu system there is actually a great choice (i’m currently working my way through the entirety of South Korean cinema!).
Buy used, you don’t need the latest model, but just check that it’s got a hard drive and HDMI port. I’ve got a couple of the Premium models which are fine and much cheaper then the Elite model. You’ll be looking at about £60-70 used (sorry if i’ve just lowered your sale proceeds TSY 😉 )
It’s better to buy from a friend if you can, or a proper used retailer, since xboxes can on occasion develop faults, which kids on ebay etc don’t bother to tell you about (google Red Ring of Death).
If you buy one and it doesn’t come with a headset (so he can talk to mates online), let me know and I’ll send you one for free. i don’t use it so would prefer it went to a good home than sitting doing nothing in a drawer!