No you can do what is called "softmodding" it is where you flash the drive and install a custom OS. How you do this will depend on your 360 model and the make of drive in the machine.
Be warned it can be very complex. Do a LOT of googling beforehand to make sure you have the latest and best tools. You can permanently screw up your 360 if it goes wrong. Also you may lose the ability to install later OS updates that add new functionality. You may also lose online connectivity to XBox live and multiplayer. But you can just run dled images off the internal hd or burn them to a rewriteable disk.
