Xbox360 HARD DRIVE: You must have an XBOX 360; 20, 60, or 120 HDD to store downloaded content, game saves, accounts, and updates.  You cannot use an external USB drive, or just connect ANY SATA drive as a stock replacement.  You can only upgrade your HDD to 60, or 120, see the menu below for information.

XBOX DVD DRIVE: You cannot use just any PC SATA drive to replace a XBOX360 drive.  If you buy another Xbox360 DVD drive, it will NOT PLAY GAMES unless you reflash it with your original drive's KEY.  The Xbox360 DVD drive has a proprietary 12pin power connector (has more than power), and the laser tray motor is wired backwards, and firmware is proprietary you know.  NO, you cannot use a Kreon flashed drive.

As far as the HDD and DVD drive info goes?  If you do not want to take this at face value, then that's your issue.

UNAUTHORIZED STORAGE DEVICES
Unauthorized Memory no longer work with the Xbox 360.  An October 2009 update prevented the use of third-party memory units.  Datel is one confirmed maker of memory units that were disabled.  As of 10/21/09 - No one knows what effect this has on Unauthorized HDDs.   

UPDATES: Know the difference between a SYSTEM update and a TITLE update.  If you place a game in the unit, and it says it needs to update, then UPDATE.  If you try to sign in to live and it says a SYSTEM UPDATE is required, that's on you.  System updates are Dash, Kernel, and whatever; Game updates are fixes for the game, be it glitch fixes or performance fixes.

CFW UPDATES: The reason new CFWs come out, is to keep up with Microsoft's anti-piracy measures.  You must update in order to stay ahead of them.  They detect flaws with older firmwares, so new ones have to be made to correct issues they detect.

BACKUPS:  If you download backups, then you will always risk getting a BAD backup.  Be warned, there ARE people out there that are purposely releasing BAD images.  Why?  Because M$ can detect them.  No, why are they doing THAT?  Well, you can only guess, but it would be from people just to be ignorant, to M$ agents placing them there so you WILL fall for it.  In any case, you better verify all your images.

WILL THEY REPAIR IT? M$ is now returning consoles that have been opened, have a broken or no warranty sticker.  They are sending consoles back with letters stating there is any evidence of tampering, or has blatantly been tampered with, and; that they will not repair it.  You will get a letter stating they will not repair it, even if you pay, or sent payment with it.

You cannot make a perfect 1:1 copy with any commercial software.  You must follow the backup procedures in the tutorials, and the DVD drive must be flashed with hacked firmware for them to work, PERIOD!

Using backups DOES NOT shorten the life of your DVD drive, or the laser assembly.

If you bought a used Xbox360, and it was FLASHED, that does not read games discs?  If you do not have the DVD drive KEY, you will not be able to repair it.  This was why they SOLD it in the first place, because THEY didn't care to keep the original dump with the key.

LiteOn Drives - Now Flashable As Of December 24th, 2008.

Philips-LiteOn DG16D2S-09C - HW: AOA2 - SW: 83850C.  As of October 2009 can't be modded.

You cannot play retail games, or backups from the attached or external Hard Disk, PERIOD! The November 2008 System update (NXE) allows game dumps to the HDD, but still requires the original to boot & play the game.  This is not a HACK, it is an option that M$ is allowing. 

Xbox Live: It is never safe to connect your 360 to the Internet if you play backups, or especially games before they are released.  The console farms information for transmission when you DO plug it in.  You do not need to be signed in either.  No one in the forums works for Microsoft, so don't ask about it.  If you need to ask, call Microsoft and ask them.  You do all this at YOUR own work, don't make it someone else's problem.  If banned, it is a Console ban; that console can never use Live again. It has nothing to do with your GamerTAG, or the hard disk (which you can move from console to console).

BACKUPS - Issues that can cause anomaly flags:
If a backup takes longer to boot than the original, there's a problem - and now a timing anomaly recorded.
If you put a backup in the drive, and there is no picture preview, it's not a perfect backup.

If you download ISO files (shame on you), then you take the risk of getting a bad ISO file.  People are putting bad ISOs out there in purpose, because, well, they are jerks and get their kicks knowing you may be banned for using it.  Do not be surprised if M$ Agents are also doing this.