Here were the steps I took:
1. Download the LUD iso and burn to CD (http://sourceforge.net/projects/xboxhdm2/files/LUD/LUD-v1.01.iso.zip/download)
2. Prepare target hdd for hot swap by providing it an external power source (used a USB/IDE kit for this part) and setting the mode to slave.
3. Boot up the LUD disc.
4. In the gentoox linux loader, select Chimp.
5. Wait for booting initrd [ok] message and then immedicately performed hot swap of IDE cable from DVD drive to target hdd. Default setting in the config file allows for only 10 secs. If you see "Starting Chimp" before you are done, then you are too late and will need to start from Step 3 again.
6. Verify both drives were detected using option 1 (Scan).
7. Select option to clone master to slave.
8. Wait for completion of cloning process.
9. Back on the menu, select Lock Slave drive and lock the drive from the motherboard.
10. Back on the menu, select shutdown.
11. Move IDE cable back to DVD drive.
12. Set target hdd to Master mode.
13. Connect original hdd IDE connector to target hdd.
14. Disconnect power cable from original hdd and plug into target hdd. (Note: I didn't do this initially and was still using the USB kit power source. This resulted in Error 07 upon boot up. When I switch to using the original hdd power cable, the target hdd came up normally).
15. Boot up Xbox again with LUD disc. Select Chimp.
16. Select option to format master drive extended partitions. I am using a 500 gb drive so I selected the option to put everything after 137 gb to the G drive.
17. After partitioning is finished, shutdown again and remove LUD disc.
18. Boot up again. The xbox should now boot up normally as before as it had with the original hdd.
