Can you tell us what you tried so far? If it's just not being detected, be sure to try more than one of the USB ports in case one of your ports is not functioning properly.
Any external USB CD-Rom/CDRW/CD/DVDRW drive should work.. The only potential problem you may have is if you use a slim USB CD-Rom that does not have it's own power cord/adapter. Not all USB ports provide enough power to use a USB Hard drive and sometimes CD-Roms.
That being said, are you trying to just install software inside Windows? or actually install Windows ?
If you're trying to install Windows fresh, there might be an option in the bios to ensure your CD-Rom is selected as an available boot device. Sorry, i'm not familiar with the 360 to be more specific than that.
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