Instructions
Purchase a hard drive with enough space to suit your needs. Most official Microsoft Xbox hard drives have 120 gigabytes of space, typically more than enough for many movies and games, though some hard drives have as many as 250 gigabytes.
Turn on the Xbox 360 and remove any discs from the disc drive. Insert the software CD that came with the hard drive. Make sure the Xbox 360 is connected to a TV via HDMI, composite or component cables.
Press "A" when prompted on your TV screen to continue with the hard drive installation.
Plug one end of the transfer cable into the lone plug input on the hard drive and the other end into the USB port on the back of the Xbox 360.
Press "A" to begin the formatting of the hard drive. This process could take well over an hour depending on how much information is already in your Xbox 360's memory.
Remove the disc once the formatting is complete and your Xbox 360 should restart.
Remove the USB transfer cable from your hard drive and Xbox 360 and slip the hard drive into the hard drive slot on the top of your console. Make sure the gigabyte rating (120GB, 250GB, etc.) is facing up. The hard drive should snap in snugly, completing the installation.