I mostly followed this guide using a USB key and an xbox to usb adapter that I bought from www.suntekstore.com. Suntek looked sketchy and their search interface is terrible, but the product totally arrived when expected, worked great and was a great deal -- $4.82 with free shipping from Hong Kong. Scott had included both Mech Assualt and the Tom Clancy game, two of the three exploitable games for softmodding. One thing left out in that guide -- hook the USB key up to the xbox first for formatting.
I already have my readyNAS NV in the closet serving up my mp3s -- it's taken a long time to rip all the CDs we own, but they're pretty much all on there. Now I'll need to rip my DVDs too -- way easier than walking over and putting a disc in the player.
Thanks for the great birthday present Scottie! It is as awesome as I thought it would be. Glad I already had the NAS setup, makes this part a breeze.