Well, i dont wanna go blow away loads of cash on a HD so, do you think if i enabled my ipod in diskmode then it could act as a working harddrive?

Nope. No external hard drives work.
It won't be long until some company decides to hack into the Xbox Hard Drives, find out what needs putting onto the External Hard Drive and they'll create an adaptor for extra storage, which attaches where the Xbox HD would go.
In fact, I think they exist.
No, It wont work, invest in a more powerfully, e.e built in hard drive.
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