Will it transfer?

The license transfer does not transfer anything to another account. Nothing can be transferred between accounts. The transfer tool transfers licenses between consoles.

The license transfer only transfers content lisenses. It does not transfer game saves. You would have to use a data transfer cable as suggested or a usb drive to transfer the saves.

License transfers will only transfer licenses between console. It doesn't transfer licenses between accounts. There is no way to transfer content between accounts.

Here is the transfer FAQ -

Does the system come up with the Transfer Cable as detected?

www.xbox.com/.../Transfer

Or is it the old style that uses the CD to do the transfer?

The licenses are tied to the console so using the same hard drive would not transfer the licenses and licenses cannot be transferred via transfer cable. The only way to transfer licenses is through a licence transfer over Live.