you do not need a hdd in any way to play 360 games you just need it for the original xbox games but you do need at least a memory card to save 360 games saves and to get on xbox live.
PS: O and for games I have doa4 and me and my friends are lovin it we got it about 70% unlocked so far. Its really alot harder than the older ones at least i think so.
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Cpu: 3.2e OC to 3.7GHz P4, mobo: Msi neo 2 platinum, ram:2Gig Mushkin pc 3200ddr, video card: ATI x850 pro (bios moded to xt), sound card: Sound Blaster Audigy 2 ZS Platinum, hdd1: 160GB, hdd2: 200GB,hdd3:250GB,hdd4:320GB, 48x24x48x12x4x dvdcdrwdl, 52x32x52x16 cdrwdvd, os: Win xp pro