Can I play video files from the 120GB hard drive?

No, there's no way to transfer video files to the Xbox 360 hard drive. The best way to play your video files is by putting them onto a USB drive and playing them from the built in video player.

I have a 120gb hard drive so can i play my original xbox games

MikeBj, I have used my transfer cable that came with my 120Gb hard drive to transfer from a 20Gb to a 120Gb and then from the 120GB to the 250GB in my present S model console with no issues whatsoever.

Hi! Morrowind is an original Xbox game, and you'll need an official Microsoft Xbox 360 hard drive to play it. Since the arcade console doesn't come with a 120GB hard drive directly from Microsoft, I assume the hard drive may not be official.

To play Original Xbox games, you need an official Microsoft hard drive.

There is no official 120GB hard drive for the Slim. For the Slim, the hard drives are 250GB and 320GB (and one with 4GB internal flash memory); there is a 120GB hard drive for the first iteration Xbox 360 and later Elite console.

So if you're sure yours is the Slim variant, the hard drive itself will be the problem.