Yes.
A 20GB hard drive is sufficient if you don't want to install 360 games or download Xbox Originals. If you want to use your hard drive to install games, or want to use a high quantitiy of downloadable content and Xbox LIVE Arcade games, you should invest in a 60GB, or even a 120GB drive.
Sure do what u want
No.
Yes, you can. Simply remove the hard drive then insert your new one. Unless your Xbox LIVE account is on the old hard drive, then it will not affect your Xbox LIVE experience. If your account is on the old hard drive, you can move it by selecting it inside of your Storage settings, then hitting Move. After that, just choose your new hard drive and the transfer will begin.
if you have a hard drive you can play the xbox game's
Yes.
yes
Yes, but you must have a hard drive to play them. And note that you will be disconnected from Xbox Live while playing it.
No, however you can buy the game from xbox live marketplace and the game will be on your hard drive
yes it can
Yes it will work fine.
xbox live is on all xbox's but you have to pay the only difference with arcade is you dont get a hard drive or an online microphone