No you dont need a hard drive though you may want to consider getting one at least 65GB cuz xbox live downloads 10-30MB's an hour.
OK, well you were half right in your question. In order to play on XBox live you will need either the wireless network adapter or run an Ethernet cable from your 360 to your home router. Simply having the hard drive will not allow you to play on XBox live.
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.
Yes.
yes
Yes.
if you have a hard drive you can play the xbox game's
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