[quote name='Wario64']I highly doubt MS will ban 3rd party HDDs. There are lots of 3rd party HDDs out there that are passed off as 1st party on eBay and other places with convincing packaging that would easily fool uninformed people. If Microsoft suddenly pulls the banhammer on these people, they'd have a PR nightmare and lots of people would get banned without even knowing they had a 3rd party HDD.
3rd party HDDs can play BC games too, it's just that most people who make them don't bother putting in the partition to allow BC. If you're making the drive yourself, you can follow a guide out there if you want BC playable[/QUOTE]
That's my idea as well. I knowingly bought mine as a third-party hard drive because I really don't have the money right now to get an $85 hard drive that should cost $40. It's a very convincing hard drive, and honestly they tried too hard to make it look real. They clearly stated that it was't OEM. You can tell the the "made for 360" is fake as well as the fact that it doesn't say "250gb" on the pull tab, but it works just the same.
No one has complained about being banned because of it, and while the whole numerical system might be true, Microsoft should be more worried about people who are playing illegal games than people who buy a hard drive that doesn't say "Microsoft."
I have the free live account right now, since I was really just wanting the console for the arcade games and some of the exclusives. I don't know why you would get banned from a free service.
As far as the BC is concerned, all hard drives work the same way, with partitions, even Microsoft's "official" ones.
Sorry for introducing such a sour subject into this thread.
Back on topic, the Walmart deal is really great. You can't get a better deal on a new system with Kinect. I bought a Kinect off ebay for $75 shipped and that was the cheapest I've found. You can look at this deal like this: $199 for the system $50 for Kinect.