I also used my first XBOX to play music. In fact after my DVD drive died, I could still use it as a jukebox... But I didn't have the room for 2 Xboxes. I was in a pawn shop the other day and they had a Christmas special for $29.99 used XBoxes. It's a great deal, but we already have 2.
It's super easy to swap out a hard drive. You could just get a new system and swap them. This way you don't have to worry about loosing any save data.
It will take you all of 20 minutes, if that.
You can clean it out and mess around with the broken parts if you want.
Just be sure and have torque drivers handy. Can get an el-cheap-o set at Lowes or Home Depot.
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