First of all, this sub-forum is only one page, so you don't need to bump. Second, yes, you need to have the game on your hdd. Third, you need to edit your xbe, preferably so that it reads in its local directory for the mod files, you can find out how to do this by reading the tutorial thread at the top of the page. Fourth, take the esm, run it through tesdtk, like it shows you in the tutorial thread at the top of the page. Fifth, copy all files into the data files directory of the morrowind directory on your xbox hdd.
If you follow all the tutorials, IT WILL WORK. You need to realize however that your house mod may not work with xbox if it uses textures that are too large, or too many complex meshes. If it is just an esm, and doesn't conflict with any other mods, then it should be all good. If you want a good house mod, I reccomend the "Abandoned Flat" mod, it works marvelously and has lots of hidden stuff in it.