I have an old x86_64 computer which I am planning to use as a NAS. Which of the 2 is a better option? Is it helpful or better to run on bare metal or as a VM on proxmox?

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What benefits to running it as an VM rather than on bare metal.

For me just the convenience of having everything in one box. Simplifies networking too. I run home assistant, openwrt, OMV, an ubuntu dtop VM and a wordpress LXC on a little m93 I jacked up with 32Gb RAM. Backups are dead simple and it’s all on one little UPS.

Some might prefer metal for other reasons but simplicity and convenience are priorities for me, at least in my homelab.

The rules now are generally: bare metal if that’s all the box will do, or it’s main task, container if it’s one of many services, vm if it’s a larger application you might migrate and i/o isn’t your limitation.

The line between container and vm is fuzzy, but bare metal means you’re making a design choice for that machine and if that or another application breaks the machine you’re screwed.

In a way freebsd is amazing for this, you put all applications in jails and don’t use the main userspace much, but the virtualiztion story isn’t quite there yet.

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