Xbox
BIOS

defn.: Basic Input / Output System. The hard-wired instructions that the CPU uses to boot up and to control I/O devices.
To "mod" or "chip" a Xbox new BIOS software is required. There are currently 8 versions of the Xbox circulating and each version required a different "mod".
The older versions (refer to table) had an ability to rewrite the existing BIOS on the motherboard with a new one, in this case the "modded" Xbox boots from the existing on board BIOS.
| Version | Modchip required |
|---|---|
| V1.0 | no |
| V1.1 | no |
| V1.2 | no |
| V1.3 | no |
| V1.4 | no |
| V1.5 | no |
| V1.6 | yes |
| V1.6b | yes |
Due to motherboard changes, newer Xbox's require a "modchip" as the on board BIOS is no longer rewritable, these "modded" Xbox's boot from the BIOS software written on the "modchip" instead of the BIOS chip on the motherboard.
The BIOS software works the same in both cases, the only difference is where the Xbox looks for it's boot up software, so depending on what version of Xbox you have will determine what form the BIOS upgrade (a.k.a. "mod" or "chip") will take.
Note that old versions of the Xbox can still be fitted with a modchip if the extra functionality of some modchips or the use of "Xbox Live" is desired.
Follow this link to find out what version of Xbox you have.
Dashboard

defn.: The Xbox front end menu system. (If you start an unmodded Xbox with no disk inserted you will see the original M$ dashboard on your T.V.).
A new dashboard will gives you access to games and applications installed on the hard drive. The original M$ dashboard is very limited and will not allow you to start applications installed on your hard drive.
A list of some of the applications for the Xbox can be found here
Hard Drive

The original Xbox has an 8Gb IDE hard drive, this can be replaced with a larger one to allow you to store many more Xbox games and movies on it. Xbox games typically consume 2-6Gb of file space.
Installing a larger hard drive is a matter of formatting it to the Xbox file system (XFS) and copying the old file structure across from the original drive.
More info
www.xbox-scene.com has everything you ever wanted to know about an Xbox.