is about the only way to get a bit of space out of your standard xbox HDD ( 2Gigs Providing it supports it )
Your x:/ y:/ z:/ drives are configured to act as data caches for games to assist in loading times.
Any files you see in these folders are fine to delete ( They will be put back there whenever you load up a game that uses them ).
If you want more space - Buy a larger HDD and install it.
DO NOT try to remove/modify partitions or you will end up with a dead xbox! , Because you have a softmodded box , You must be extremely careful moving/modifying files inside the c:/ and e:/ drives.