i built a big arcade machine a few years ago, to use the xbox would be simple with alot of work
check out
this for some ideas on how to intergrate the ciruits and what to buy and stuff
what i would say is youll need to modchip it (for convience) and have the usb ports and all
and run a linux that supports MAME andjust see where you go from there
its a huge undertaking, and no one can walk you through it, just trial and error, trust me i know