Humm.
When you boot the 360 via the powerbutton or the controller, you should wait until everything is loaded in then press the Eject button on the console.
If correct, the tray shouldn't open and it should load in a "mixed media disc".
After that you can press the powerbutton, press right on the Dpad and select System Video player.
Then go to said "mixed media disc" and load in your game.
Judging from the video, I think the modshop just didn't provide enough information to you.
The modshop told me I don't need any update btw. I got the newest version of xKey. xKey supports NTFS, FAT32, etc...
but xBox itself supports only FAT32. That might explain something.
K. Imma write down from my brain what I got so far for myself:
#1 Download games to your 2TB NTFS HDD.
#2 Name the folder on the HDD "games".
#3 All games come in there. They MUST be .ISO files.
#4 The HDD must be already running before turning on the xBox.
#5 Put the USB-Dongle in the nearest outcome of the white cable in that exact USB slot.
#6 Connect the HDD with the USB-Dongle.
#7 Turn on the xBox in the xKey mode by either pressing the xBox controller menu button or by pressing the power button on the xBox itself.
#8 Wait until it's turned on properly.
#9 Either:A) Open the xBox by pressing "A" on the controller or B) Pushing the "open tray" button on the xBox.
#10 Repeat #9, so the tray closes digitally and / or physically.
#11 ??? A "mixed media" disc MUST show up. That is the indicator that it's working ??? <--- Not 100% sure about this.
#12 Go to "apps" and select the picture app. The HDD should be shown as a media disc. Browse through and select an ISO
in the "games" folder. By doing so you switch the game.
#13 You're able to play now.