Dreadnought of Fury said:
So this means we can store data AND play from it?
From my personal experience, having used an external drive since December 2007...
No.
The external drives can only be used for media -- videos, pictures, music files -- most file formats supported by M$ will work -- this means no *.MOV or other Apple formats...
The Xbox will allow you to browse directories on the drive, and select appropriate files, and launch them on the console.
HOWEVER, you can NOT play games from the external drives, or save game data to them (gamesaves, DLC, etc).
You didn't think M$ would make it that easy, would you?
So yeah, the answer is yes and no, but if you're looking to just store media files from your PC on it, and launch them on your Xbox 360, it should work fine.
My external is a Western Digital Elements 500gb drive that Target had on sale on Black Friday in 2007, $89 plus tax. Good deal, no? Worked out of the box, too.