
A few hacker enthusiasts manage to boot Xbox Live Arcade games on standard CD-R and DVD-R media...
Yep, some folks over at 360gamesaves.com have found a way to allow Xbox 360 gamers that do not have a hard disk (or just want to free up space) to play XBLA games on typical media.
This will allow you to take one or more game files but your account must still have purchased the games in order to play the full version. If you pass the CDROM to a friend it will play the games in the typical "trial mode" unless they go out to Xbox Marketplace and buy it. However, buying the game does not require disk space, just the ability to pull down your gamer profile which occurs when you login to Xbox Live.
Thanks to TANK for the information