Nick is the resident ghost of the Gryffindor house, who is called Nearly-Headless because when he was alive, he was a prisoner and was hit in the back of the neck with a blunt axe 47 times still leaving it hanging on by a half-inch of skin and sinew. 

In the Chamber of Secrets, he sees the Basilisk in the eye, but since he can't die again he was just turned into a puffy cloud-like creature. By being attacked he saved Justin Finch-Fletchley's life as he saw the Basilisk threw Nick, so he didn't see it directly in its eye's so he was only Petrified.

Also in the Chamber of Secrets, Nick celebrates his 500th Deathday, and he invite's Harry, Ron and Hermione to the celebration to prove to the headless hunt he was truly scary so that he could join the hunt. During it, the Headless Hunt showed up, Nick didn't approve of this because he was in the middles of a speech and he had wanted to join the Headless Hunt but couldn't because he wasn't completely headless. The Hunt then drew the attention away from Nick by playin head hockey causing Nick to be upset.