No u can only burn DVD's on DVD writer, the Pioneer A04 is the best one to get at the moment using 'Primo DVD software. you can burn X-box games that have been ripped 2 fit on 80min Cd etc. However, CDR do not work properly on the Xbox so all games should be DVD based.
Regards to the Modchip, i have the Enigmah final chip which is excellent, but as you know their are other chips available now with less wires etc, and with nearly the same features as the Enigmah.
I don't think you have to worry about patching ur games, as the old the Beta versions of the Enigmah and Extender had that problem.
Check this site out for more infomation.
http://www.xbox-scene.com