ya i'd start with a modded xbox 1st :-D soft-mod www.how2xbox.com that is what i did...that site shows you everythign you need to know mod-chip i'd get the DUO X2..its cheap but you have to solder...check out www.hackdabox.com good luck
once you get it modded get a hard drive upgrade next the stock one will just not do, not enough space then after that i can link you to all kinds of good tutorials for installing it, geting emulators and roms, how to make back ups and all that. i suggest the chip. if you don't mind sending it off i know some real talented people who can mod it for you. you will have a great system when they are done with it. http://teammodders.com/