R1sky has it backwards, your XBox will work fine if you:
a. Frugal Install- Basically a "Live CD" from the HDD
b. Loopback Install- Same as Frugal except the file system is stored in a "loopback file" that is 200 MB to 2 GB large, depending on settings during installation.
If I remember right there should 2 more options, that will do a native install:
1. Install on F- Formats F to Linux partition
2. Native Install- Completely formats XBox HDD
The easiest way to go is to FTP over a Frugal Install (Steps in guide that comes w/ ISO) and then install a loopback from within the Frugal.
Hope I helped!