I used XBMC heavily for years. Sometimes you can get it to stream 720p cleanly. Depends on the container type. Never anything better than that.
works fine for streaming the kids cartoons off the NAS. it's a plain old composite TV anyways.
I switched out the one in our bedroom for an android box mainly for netflix. But i had softmodded that box and swapped out the harddrive.
Once i softmodded, part of the installation was to extract the HD key lock and write it to a file. I used FTP to access the file and drop the key onto my computer. I don't recall which program it was, but it involved burning a boot CD and adding the key file to it. (you could also manually enter the key but it's ridiculously long and i'd likely screw it up) then it just created a locked drive you could swap to the xbox and boot from it.
so i made a 250? 350? gb HD (it was the only one I had that was lockable at the time) and threw it in.
If i recall you can also use a jtag or something to pull the BIN out of the BIOS and obtain the key that way.
in any case, i'm sure there is some way to make that drive work with a different xbox. it's just a matter of what the status of the boxes are/where to begin with is how you are going to have to go about it.