Right now there are 3 Editions on the market:
- 360 Arcade
- 360 Elite
- 360 Slim
Now the Slim is replacing the Elite, so that one will be phased out. There is also plans for a slim arcade version which will phase out the arcade. As a result neither the Arcade nor the Elite are currently in production.
The major difference between the Elite and the Arcade is the presence of a Hard drive. While the Arcade does have a small amount of on board memory, it isn't much.
Additionally, the Elite comes with a Headset and Ethernet cable.
The new Slim also comes with hard drive, headset, but lacks the Ethernet cable in favor of built in wifi (which must be purchased separately for Arcade and Elite).
You can still find the standard Elite with 120GB HD or 250GB HD and 1 or 2 Controllers (all others come with just 1 controller).
It is worth noting that the Slim is branded as Elite, even though it is different than the current Elite you can find on the market. The noticeable difference is the slim being smaller and having a less rounded exterior.
I currently use a setup similar to what you're going for. I'd say as long as the monitor supports HDMI and 1080p, you should be fine visually. Not all games run at 1080p, but for those that do you'll get the best image possible.
The Xbox 360 does support audio over HDMI, but you can opt to use either RCA or digital audio instead if you want. All of the manuals for Xbox 360 hardware are available at http://support.xbox.com/support/en/us/nxe/hardware/manuals/InstructionManuals.aspx (although I don't see a manual for the new Xbox 360 S that was released a few months ago, but I'd guess that as far as you're concerned the Elite manual should give you the info that you need). The manuals go over the various combinations of audio and video that are supported, so hopefully that would be able to answer your questions.
For speakers, I'm currently using a 2.1 Logitech system that I've had for a long time. They meet my needs, but I'm no audiophile. I'd suggest not using your monitor's built-in speakers, since those types of speakers tend to not be very good.
I also have a Turtle Beach headset which is much better than the headset shipped with the console - both game audio and voice are sent to it, and it auto-balances the sounds during game play so that voice chat doesn't get lost among the game's audio. Since the headset is wireless, it requires two AAA batteries, but I use rechargeable batteries and they last for a long time.
As for controllers, the only time I've noticed a loss of signal is when the batteries are getting low (but then again, I'm sitting at my desk only a few feet away from the console). I've also noticed that battery life is quite good, but I use standard rechargeable AA batteries rather than the Microsoft battery pack.
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According to this post I found, you can indeed get a virus on Xbox 360, at least. However, it would be a pretty rare occurrence for several reasons:
The bad thing, though, is that game consoles don't have any virus protection systems in place, as far as I know. Also, with the Xbox One switching to Windows 10 as its OS viruses could potentially be a bigger threat for all Windows systems. So, based on some of the research I did on this matter - yes, in theory you could get malicious software on your console, however, in practice it's nearly impossible as of now.