How to Install, configure & use USB flash drives & external hard drives on Xbox 360s
Is your Xbox 360 lacking on storage space? Need just a little bit more room? Maybe a new hard drive isn't the answer for your needs. Maybe all you need is a USB flash drive. You could also use an external hard drive that connects via USB cable.
You need to make sure you have the latest Xbox Live update on your Xbox 360. Make sure to download it, if necessary. Then, just plug in your USB flash drive or external hard drive!
NOTE: These devices must be over 1GB in order to work. Anything less will not work effectively.
When connected, go to "My Xbox" -> "System Settings" -> "Memory" -> "USB Storage Device" -> "Configure Now" and continue to configure your drive.