It's possible to use 3rd party 250gb or 320gb hard drives in the xbox. But it won't accept drivers larger than those two sizes.
http://gizmodo.com/231670/install-we...-your-xbox-360
Here's a link to an official 320gb HD for Xbox360 but the price is steep in my opinion.
http://www.amazon.com/Xbox-360-320GB.../dp/B005PSTV2K
Seeing as 320gb laptop hard drives are only $50 I'd rather buy a 3rd party drive and hook it up.