no, you dont need to tune the tv. When i tried it, it didnt need to be tuned at all. And yes, the picture quality is rather bad, the tv has a low res. but you can set it on a high res. So the signal may be good quality, but the TV will interpret it as low res - a tv would be crappy for a monitor. However if you want to play movies on your tv screen, it may just work. This would be good for a home theater setup.
For audo, it is a bit trickier. You need to get another converter depending on your sound system. If you use the TV's inbuilt speaker, you need to get a converter to convert the plug from the sound card that looks like this:
to something that looks like this:
Now with RCA, there are three cables. Video is Yellow, and the other 2 is sound. If you have only one audio cable plugged in it is mono, if you have both plugged in it is stereo. You may need to get something special to get the one audio output to properly do stereo with the 2 inputs for the tv.
If you are using some hokey stereo system it will be different depending on your system.