Thing is that XBL uses a combination of EEPROM and HDD key.
If youre xbox has been regged to XBL it has your EEPROM number and your current HDD key. Lets say you switch to a bigger HDD after you've been playing with your original disc. Then XBL will detect a new HDD key and probably ban you as you have tampered with your xbox.
But if your xbox never has been connected to live then you can change the HDD first and then go to live. Thus registering your larger HDD with your EEPROM.
On the other hand I prefer Xlink Kai or similar as they are free. Don't cares if you are using a larger hdd or has upgraded the hdd. Most things will do but still use your original games...