I'm thinking about buying an Xbox 360 (Current Arcade Model) given the recent price drop. I was wondering if I could install normal hard drive (like the 3.5 in from my desktop) inside it to store music and backups. I know previous models of the Xbox 360 Arcade Model wouldn't allow you do this, but does the current one?

No you can't. You'll have to get a Western Digital hdd, and use hddhackr to setup the drive in either 120 or 250 gb settings (typical xbox 360 drive sizes). Reason is that hddhackr app was written specifically for WD drives.

And if you want to use any other brand or make, you're on your own.

I would like to know about this aswell,

I have loads of old Xenon boards that I'm currently nuking with a heat gun, and manage to revive some, but I dont have , cant get easily is the external case HDD case..

I know I can buy online but nothing local and the shipping cost as much as a new 500gb 3.5inch drive.
Since I JTAG them all I can just aswell solder the SATA cable to the board and use what ever drive I want?

I've been looking around but cant really find a pinout from the board to just a sata cable , I'll source power from the DVD rom cable, since I wouldn't have a rom installed I dont worry to much about the DIY look , if the board last more than a month after I nuked it, I'll think about making it look pretty.