Xboxes are complicated

I would like to play Xbox Live Arcade games, especially this one. This will necessitate buying an Xbox 360. Fine, whatever.

There are two kinds of Xbox 360, "Arcade" and "Elite". There have been two others in the past, "Core" and, I think, "Premium". Of these four, obviously the one I want is "Arcade", because all I care about is playing stuff on the arcade, right?

No, because the Arcade one is the one with no hard drive, which means you can't download things from the arcade. I'm going to say that again: the one called "Arcade" is the one that is useless for using the arcade.

So, buy a hard drive. Not so fast there sport, it's $100 for 120 GB. This is beyond ludicrous. I can get a terabyte for that much now. And I can't just plug a normal drive into it, since it needs some special drive holder.

And, "Arcade" + hard drive costs more than the "Elite".

All the reviews of the thing talk about how the "Arcade" is great for most people, because most people don't care about any online stuff and just want to play games on discs. If you're the opposite, though, I guess you're screwed.

Any advice from people more into the Xbox ecosystem than me?

Incidentally, I like a job where I can work from bed on cold mornings.