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It's running an OS based on the Windows2000 kernel. It will slow down, freeze up, and reboot to no end. The X-Box has killer hardware specs, but running a MS OS it will probably perform like an Atari 7800.
In all seriousness though, the Babbages near me has one and it does work, but I was not impressed at all by the performance of the system. It was only running at 30 fps.
My Dreamcast, which doesn't have the hardware specs the X-Box or PS2 have, can easily play games with good detail at 60 fps. One reason is that while Microsoft and Sony went for killer hardware to ensure the games play fast enough, the Dreamcast's hardware worked to minimize the amount of information it had to process. It did hidden surface removal (HSR) in hardware, and would first figure out what objects were obscured by other objects, and wouldn't waste the CPU power rendering them. Also, they made sure it was very easy to program for and extract the full power of the system. That's why Crazy Taxi, which takes place in a busy city, plays so good without slowing down. The Dreamcast supported running games under a MS OS, but I hear games using it executed so slowly they didn't bother ever utilizing it. The PS2 had some crappy games out for a while which didn't utilize all the system's power, but when I went in EB I saw a new PS2 game that looked pretty impressive.
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