For a Factory Reset, you just need to format your hard drive.
To do this, simply go to this site:
http://support.xbox.com/en-GB/xbox-360/accessories/storage
Scroll down to the "Format a storage device" section and follow the steps there. This section also shows you where you can find your serial number, which is sometimes needed to complete the format.
SOURCE: 360 drive only reads dvds, not xbox 360 games, just says put in an xbox 360 console.
You need to flash the drive with the old drive's key; otherwise the your xbox motherboard will not allow that drive to access the gameplay engine and will not allow you to play games.
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