Shouldn't be anything special. As long as you are using media that you know your Xbox can read. Most boxes have Thompson drives which can't read CD-Rs, so you will need to use a CD-RW or a DVD-/+R. The dummy file isn't required, but again - some boxes have trouble reading discs with small amounts of data on them and so a 100mb dummy file makes it more likely that your xbox will be able to read the disc.
The best way to determine if your xbox can read a certain type of media is to test it BEFORE you put the modchip in. Simply burn an audio CD on the media that you plan to use and test to see if the MS Dashboard can play it. Again, Thompson drives are the most finicky and for those it's best to use CD-RW media burned at no higher than 4x.
Flagg