You can do what is said above, but the transfer kit is just the quickest way. I could've sworn my transfer cable brought everything over though.
Why is the transfer kit the easiest way? Is the procedure different when using a USB?
I personally have never used the USB method so I can't vouch for that. WIth the transfer cable you just connect the old hard drive to the Xbox with the new hard drive attached, insert the transfer disk that came with it and hit start. Only takes about 2 minutes. Then you're all set!
At the suggestion of a co-worker, I went out and rented Idiocracy. They raved about it. That's 87 min of my life that I'll never get back. Can't believe I actually finished that shit. The Spirit, Erik the Viking, and Super Mario Bros (lol) also come to mind.
EDIT: Santa's Slay, Pinnocchio's Revenge, 3000 Miles to Graceland, and Ablaze. I have to like Ablaze because a buddy of mine is the star.