Is it possible to use the 360 to access exploit or custom firmware files that are on your pc and install it onto your 360?

or is it mandatory to hook up the 360 dvd drive to do any exploit or custom firmware.

There is no custom firmware available.

What you can do with a recent 360 :
- Not much. Enjoy Live...

What you can do with an older 360 :
- Water cool it, so you don't lose it over time with RROD
- Reflash drive to allow backup running (need to open 360 case at least once)
- Install infectus so you can dump and reflash firmware to/from your PC
- Downgrade to 1888 if you are above 4548 (with a little electronic device)
- Boot Linux with firmware 4532 or 4548 and a patched King Kong backup
- Obtain your CPU key under Linux or during vulnerable boot process
- Switch back to older or newer firmware at will, thanks to CPU key
- Change region, thanks to CPU key