You can use XMPlayer which is capable of playing video files from usb, hard drive and disc drive.
I'm not aware of anything that will let the Xbox 360 rip a DVD to the hard drive. DVD's are encrypted and need to be decrypted when ripped, you can play popular video files with XMPlayer though.
For what your asking the original Xbox is much more capable than the Xbox 360, the Xbox 360 homebrew scene never really developed anywhere near as much as the scene did for the original Xbox.
You would be better using a £30 Raspberry Pi for media playback compared to an Xbox 360.