Pico saltwater reef from a red sea deco?

I have this about half gallon or more red sea deco tank just laying around. I am thinking about making a pico reef tank (Pico means less or about a gallon). How much wattage should I use? And should a small piece of live rock, about 3-4 inches be good? And what about live sand? Can I use some sand from my backyard with it boiled and cleaned off? Will it eventually turn into live sand?