Any USB hard drive or jump drive (USB thumb drive) will work with the Xbox 360 at any brand, make, model, or size.
1.) It has to be formatted in Fat32 or the Xbox will not see it. NTFS is a no go.
2.) It will not store anything from the Xbox 360 like game saves, games, movies, etc. and vice versa you cannot upload anything from the USB device to the Xbox 360. It is a "read only" situation. You can stream music and pictures from the external device only.
3.) Windows XP will not format any drive larger than 32GB in Fat32. You must use a third party program, which is hard to come by just Googling around. I used a Linux open source program to format mine called
Gparted for formatting a 160GB external drive.
I've also been successful in streaming media from my Windows XP Pro PC without the need to use a "Media Edition." You have to download the
Zune software to do so. You will have more options with a Media Edition like XP Media Center, Vista Home Premium, or Vista Ultimate, but it is not necessary to do the basics like access your music and picture files.
It's important to note that even with the "iPod Support" download from Live Marketplace it will not play music files from the iTunes Music Store. It must be in WMA or Mp3 format or it will be grayed out and unusable.