i have managed to pull a dvd key off a driveless 360 using xell and getting the cpu key. Now i have saved the dvd key string to a text file calle key.txt how can i turn it into a key.bin file ready for flashing to a new drive?

You don't need it. Just copy and paste the key into the relevant section of JF e.g. for Liteons load your LT 1.1 as target, hit manual Spoofing and paste the key in.