(had) finished

Both usages are acceptable.

Technically, the use of "to have" is required. John finished his dinner before he watched television, and therefore, "having dinner" was an event in the anterior past, the past before the past of watching television. Watching television is something which John did in the past, and having dinner is something he did in the past before that. So, once again, speaking only of a technicality, sentence one is the correct usage.

Most English speakers are blithely unaware of the existence and use of the anterior past tense, so in fact, either usage is acceptable.

The vast vast majority of speakers of all languages are unaware of the rules that govern their language. But this is a case where ignorance truly is bliss because being consciously unaware does not mean that speakers don't know the rules of their language. Quite obviously they do as they deploy these rules daily.

The use of the past perfect in this case is not "technically" correct, nor is it "required". It's an option in the same manner that sometimes allows 'will' and 'be going to' to serve the same semantic purpose.