Windows 7: Xbox 360 + SSD?

If I bought an external SSD, and plugged it into my Xbox 360 would the 360 be able to effectively use it? I know it can be done with external HDDs (I've done this already).

don't know about compatibilty with SSD but it will work i think but Microsoft has limit the space for External/USB drives to only 16GB and the rest will be unusable. Suppose if you have 64GB SSD Drive it will only use 16GB of it.

Then why is my 360 letting me use ALL of the 20 GB HDD I have on it (its an external laptop HDD with an adapter)?

I don't believe there's a real size limit (might be 2TB if there is), as Microsoft sells 320GB usb drives for the 360 themselves.

you can access the drive and play all the mp3, videos, pictures etc. but if you want to install xbox 360 games so you will need to format the hdd and make it compatible with 360 then you'll be able to install games and extra contents but it will have a limit of 16GB even if you format a 1TB drive. i could be wrong but I assume your using your 20GB and did'nt formatted it in the xbox 360 and using this drive for other things like mp3 etc.