dealsxbox 360 4gb console + $25 amazon gift card…

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Fun fact: You can buy this console with the 4GB internal storage and use that $25 Amazon Gift Card to buy a third party 250GB internal hard drive. I believe they're about $60?

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@drummerdks Yeah you can do that if you want to take the chance of having your xbox banned. It is better to just fork over the extra $75 or so and get the real one. The only other thing I would do is get one of those old refurb HDDs from GameStop and get a case for it. These are at least official xbox drives so the odds of MS banning you is pretty slim, but even then the risk is still there.

This one from Amazon would only be around $75 after the card and its a 320GB drive:
http://www.amazon.com/Xbox-360-320GB-Hard-Drive/dp/B005PSTV2K/ref=sr_1_1?ie=UTF8&qid=1330534256&sr=8-1

Even with the drive this is still an awesome deal, and you can redeem your cash back bonus at Amazon. A 320GB Xbox for $250 is pretty sweet.

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The way to go is buy an OLD XBOX 360 HDD for cheap, pop it out of the case, then put it in the Slim like @the18thtee84 said.
You can either put it in with no case, or fork out the $2.50 and buy one like this from eBay
Xbox360SLIM HDD case

I don't know anything about the 3rd party HDD/ban situation, but I couldn't think of a reason off the top of my head why you would get banned for using a 3rd party HDD. I personally wouldn't risk it though, especially considering how cheap the old 360 HDDs go on sale for.

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@drchops Yeah, thats what I always suggest, but even with the official hard drives from the old xbox you can still run the risk of getting banned. Now as far as I know, no one has been banned for it and I cannot imagine that MS would go to that extreme, but according to the TOS even that is considered "system tampering" and can get you banned. It is a real long shot, but just a disclaimer of sorts so no one freaks out if it happens.