I cleaned up a bunch of wine barrels last year. The first one i took off some of the rings and sanded the barrel. Cleaned up the rings and replaced them. It was really difficult getting the rings back on and i don't recommend you try it. I clear lacqered that one. It was beautiful American Oak.
SO for the next ones, i cleaned the rings with a brass wire brush on a 4" grinder and sanded the timber with an electric orbital sander. Then , i painted the barrel, rings and all, with an undercoat oil paint following this i painted the barrel one colur and the rings i used a hammer finish spray paint for metal. They came up pretty good.
You'll need to put some holes in the base for drainage. Other than that, you won't need to line it unless you want to help it last a bit longer, then line it with anything you like, from plastic to a bitumenised waterproofing compound.
I have 6 half barrels now, intend to plant a mini lemon in one. Not sure what else.
Here's one i prepared earlier:
http://smg.photobucket.com/albums/v239/m.longstaff/?action=view¤t=DSC01677.jpg

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The secret is the soil.