I just used a flash stick. I brought over most of the stuff that I wanted. It's almost full again. Like only 15 gb left although I could delete some stuff.
There was no problem with game licenses transferring over that way? And what did you, constantly switch the HDs until you transferred everything over?
Just copying stuff over doesn't have anything to do with licenses. The license has been tied to the Xbox on which it was purchased AND the Gamertag used to purchase it. If you are on the same Xbox after going 20GB HDD -> USB DRIVE -> 120GB HDD, you won't run into license problems.
OTOH, if you take your originally downloaded copies of the game on that 20GB HDD, take that same HDD to a friend's house and slap it on his Xbox, you'll need to log in to XBL with your own Gamertag in order for the content to become active; because the data is tied to your Xbox, not his, and not even your HDD.