I've turned my xbox into a fileserver already using a Xenium ICE and a 120Gb WD. What are you wanting to do exactly? If you just want to store files and play games, you can still do this. With the way I have mine setup, there is an entire partition (F:) configured for only the storage of data files. I keep the xbox on and access them from my desktop via a mapped network drive. The C: holds all of the important program files the xbox needs to run dvds and play games, while the E: is where I store all the xbox games I've imaged.
Using this configuration, I can watch movies, play xbox titles, listen to uploaded mp3s, stream incoming internet radio stations, catch up on the latest weather reports, check out RSS newsfeeds, play a number of console emulators, and serve files over the LAN.