I did a search, I didn't find anything that answered my question to my satisfaction.

I have a 360 in my theater room with a 20gb hard drive, that's swell, some day I'll put a bigger drive in there, but for now, it is plenty.

We got the boy his own 360 for his room, we picked up the arcade edition with no hard drive. I knew I could pick up a 20GB with 3 month live for $30. This has arrived. He was playing with his 512MU just fine, when we go to add the 20GB drive, it says only 13.3GB free. What gives?

If the system ran fine with no HD, what's taking up so much space on a virgin hard drive? Granted, formatting takes some space, but not 6GB.

go to my xbox, system settings, memory, hard drive

it will give you a breakdown of the space usage

Did that, it doesn't add up to more than 13.7GB

It's the system software and backwards compatibility software.

I can accept that, but why don't you need that when you have no hard drive?

"approximately 4 GB of that portion is reserved for game title caching and other hard drive specific elements in games that support the hard drive, and an additional 2 GB is reserved for use by the Xbox 360 backwards-compatibility software."

From Wikipedia

Without a hard drive, you get longer load times (depending on how the game does caching) and no backwards compatibility.

Thanks for the answers, now to translate this into 16yr old speak.

"MS reserves about 33% of the 20gb drive for things you don't care about or use (directly)."