Halo: Reach requires a hard drive install for you to play its excellent co-op mode, which shouldn’t be a problem for most gamers. However if you just picked up the new, super cheap 360 that also has a super small amount of internal memory (4 gig to be exact), then you’ve got a problem on your hands.
Trying to play co-op without a hard drive will display the message “One or more players do not have an Xbox 360 Hard Drive. An Xbox 360 Hard Drive is required to play co-op on Xbox LIVE or system link” and that’s kind of that; if you’re not willing to shell out for a bigger hard drive, you’re a bit stuck for now.
Microsoft have responded, saying they’re working to resolve the issue, but when and how we don’t exactly know just yet.