I'm using a genuine M$ 120Gb HDD on my system at the moment and I was thinking about picking up a WD2500BEVT HDD sometime soon. Once I flashed the 250Gb HDD (and made sure the 360 can see it) does anyone know if it's possible to simply use the transfer kit to migrate the data over?

I still have the cable and the disc floating around here somewhere and I remember reading that you could migrate the data but only if it was to a bigger HDD, which in this case it is.

I can't see why it wouldn't work, but would be nice to have confirmation if someone has already done it and if it had worked?

it works, and has been confirmed - but you need the v2 kit, the one which works with 60gb drives.

How do I find out which version of software I've got?

Just give it a try, if it doesn't start the transfer you probably have the old version.

Maybe you or someone else can confirm the following:
When you insert the disc in your xbox the old version says "Play Game" and the new version says "Play Transfer Disc".
On page 4 of the booklet it says:

• A smaller hard drive to a larger hard drive.
• One hard drive to another hard drive of the same size.

The old booklet may say something different.

The text is taken from my booklet and after inserting the disc it says "Play Transfer Disc".

Unfortunately MS doesn't mention old or new versions:

Source

Cool, thanks. So I take it you have the newer disc?

I checked my stuff and the book says what yours says and when I insert the disc, it also says "Play Transfer Disc"

Looks like I'm all set