I'm about 99.99999999% sure that the 360 thing is not true for a variety of reasons, one being that the 360 architecture is PowerPC based - and will not run well on x86 architecture-based CPUs such as the Pentium 4, Pentium D, AthlonX2, Athlon64, etc.
The DVD drive thing is not an issue... Xbox 360 discs are dual-layer DVDs just like the average movie DVD. They just require specific on-chip firmware to decode their copy protection (which I'm guessing people are thinking Microsoft would then do in software?) I really doubt microsoft will risk losing sales of 360s with a strategy like this - why buy a 360 when you can get a full PC for a few hundred more?
Virtual memory is just that, virtual. It's basically pre-allocated space on your hard drive that your memory (RAM) will read from when page faults occur (the requested data isn't in RAM)... I would go into the whole process of explaining it, but that will bring back bad memories from my Operating Systems design class lol..

Much to learn, you still have.