SOURCE: xbox 360 modding
You cannot transfer files to the Xbox 360, you can only stream the material eg songs or videos through it. You can put the items you wish to view on a usb memory stick, but again you cannot save them to your XBox 360 only play direct from the device you use to store the videos or music. You will also need XP media centre to use the media extender software, or even better Vista premium, XP home or Pro will not share the material with XBox because it cannot use the extender software.
SOURCE: xbox modded-xbox live?
You can do it, however microsoft will eventually catch you and ban you.
SOURCE: can modded xbox 360 can get system update from
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