If you have an unmodded console and physical discs, you can use a USB drive as primary storage for installed games. Prepare the USB Drive Plug a USB flash drive (up to 2 TB) into your console. Navigate to Select your USB device and choose Configure Now to format it for Xbox content. Install the Game Insert your game disc and stay on the Highlight the game tile and press X (Game Details) . When prompted for a storage device, select your USB Storage Device
These are generally the most reliable for large libraries. High-capacity drives (up to 2TB) are fully supported as of the 2015 system update for game installs, DLC, and saves. USB Flash Drives:
No—Xbox 360 cannot install a game in the background. However, you can install one game, then immediately start playing it from USB while installing another game from a different disc? No, only one drive operation at a time.