It's now possible to install third-party hard drives into the Xbox 360, but there are some caveats. A hacker created a DOS-based program that, for now, only works on Western Digital BEVS hard drives. Also, the 20GB storage limit is still in place. It can only be surpassed if Microsoft officially releases a larger hard drive (so the 360 "knows" to look for a larger hard drive) or someone hacks the system's kernel. Since a larger hard drive has been rumored for a while now, waiting for the official Microsoft patch is likely your best bet.