Right, leave the money already in a Roth where it is. Whenever your tax bracket is low it's usually a good idea to fund a Roth IRA instead of a traditional. In future years that money will continue to grow in the Roth, no matter what you earn.
Secondly, once you graduate and start earning more, you may not be eligible to contribute to a deductible traditional IRA. You'll need to run your taxes and figure that out before you make a decision on which one to fund. The income limits for contributing to a Roth are higher than the income limits for taking the IRA deduction, stupid rule but true. If you can't do a traditional, go ahead with the Roth.
About your money market question, yes, he will pay tax on money taken out of VMMXX. But not on all of the money, just on the growth! And since it's a money market, the growth is low so the tax is very low. No worries.