The Xbox 360 HD DVD Emulator is a development and test tool that allows you to run complete HD DVD projects - video, audio, and advanced interactivity - on your Xbox 360 from an external USB drive or networked PC.
Note that the emulator does not allow you to play ripped retail titles on your Xbox or your PC. The emulator runs on your Xbox 360, it does not run on a PC.
In addition, the HD DVD playback software required by the Xbox 360 is on the add-on drive, so you will need an add-on drive to use the emulator. They are now available for $50.