Instructions
Update the firmware on your Xbox 360 console if you haven't done so recently. You can get an automatic update with full USB support by connecting to Xbox Live or by installing a game from a disc released after November 2012.
Obtain a USB drive, and insert it into one of the USB ports on the front of the console.
Press the "Guide" button in the middle of the Xbox controller, select "Settings" from the menu and then select "System Settings."
Select "Memory" on the next screen, and then select "USB Storage Device." You are presented with two options: "Configure Now" and "Customize."
Select "Configure Now" to use the entire available space on the drive, up to 32 GB. If you prefer to use only part of the drive's storage space, select "Customize," move the slider to the desired size setting and then select "Configure." Once you make your selection, select "Yes" to begin formatting. A USB flash drives takes only a few seconds to format, while an external USB hard drive may take several minutes. Once the formatting is complete, your Xbox 360 displays a message that the drive is ready for use.