Over the weekend I purchased a DLink DNS-321 network attached storage device and two 1 TB Seagate Barracuda drives. Microcenter had great deals on all three, $20 rebate on the DNS and 1/2 off on each of the drives.
Anna's parents were in town, so Alan and myself went to work running some ethernet cable in the house. I now have a nice "IT" closet set up on a shelf in the laundry room. The cable modem, wireless router, and DNS box are all tucked up out of the way. We ran cat 5e cable from there to the office, and to both the upstairs and downstairs family rooms for use by the Xbox. The cable will provide faster access to the DNS box from the office desktop. The Xbox 360 doesn't have wireless built in, so it needs hard wiring to access the internet. We use it often to watch TV / movies from Netflix- which is a fantastic service.
I started copying all my photos, music and video over from my desktop to the DNS, but I started getting some drive errors from the DNS. The DNS continued to copy files, but it notified me via a polite e-mail that the right hard drive failed. So, it looks like I'll be heading back over to Microcenter to replace that drive. It'll be interesting to see how the DNS accepts the new drive. In theory, it should automatically recover from the error with no data lost or hassle other than popping out the old drive and inserting the new one.
The DNS seems pretty cool. It shows up on your network connected computer as a network drive, and you can also log into it via a web page to look at error logs, run diagnostics, etc. You can also set it up to e-mail you when a drive has problems, overheats, gets full, etc.