Currently thinking of investing in a modded Xbox 360 hard drive (much cheaper than an OEM) but I do have multiple games that require hard drive for installation, will it work just like an OEM? Will games install and run like they would on an OEM?
Yup games will install and run perfectly fine. It's how I've played all the games on my 360 since 2009. You might need to restore partition 2 if you wish to play origional Xbox games, a lot of people selling modded hard drives don't seem to do this when setting the drives up. However for anything Xbox 360 related it will not be an issue either way.