Will any 2.5 inch HDD will be working with XDK? How can I copy all the contents from the current HDD to new one so it will work just fine?
I believe you should be able to use almost any 2.5 hdd. And if you install it then turn on the 360 and go into the normal dash and reformat it, it should give you the correct dev partitions. Obviously before you do any of this you should use Xbox 360 neighborhood and copy all the files from the HDD that you want. Then once the new HDD is formatted just use Xbox 360 Neighborhood again and copy all your files back over. I have a 360 Test kit and used to have a 360 dev kit. I was able to swap the hdd from one to another with no problem so you are good there.
I've heard of heat complaints when running 7200 RPM drives in consoles, this was for the PS3 so this could be TOTALLY different, but for me 5200 runs fine. Most HDDs at stores like Best Buy or Frys will work, or your local variant.