What to do with old wood nail keg?

Depending on the size put drainage holes in the bottom and make a planting for a focal point in a garden

Sell it at garage sale for $5-$15.

Depending on its size, put around top on it for a stand. Local hardware that has lumber should be able to cut it for you. Use stencils to do top. You can paint it first, and paint stencil a different color, etc.

I have one that sits in my kitchen and it holds all my rolling pins.

What a lucky person you are! Cut it in half to make two smaller half barrel planters (of course you need to make a base for one half); make a cushion on the top for spare seating (storage on the inside) or use it as a rustic base for a birdbath! Have fun!