You'll still have a problem if the Xbox fries itself. When you download off Xbox Live your registration is written into the HDD you use AND the Xbox hardware itself. If the Xbox dies, you get a new one, and plug your old HDD into the new Xbox, your downloaded content won't work, UNLESS you're signed in to Xbox Live while using it. To recover full access to what you've downloaded you have to call Microsoft and explain what happened, give them the serial numbers of both consoles, and then wait for them to transfer the registration to the new console, which takes about a week usually. Anyway, I'm not 100% sure, but I don't think you can download games to a memory card.
