Removing the old HDDs from their casing, for use in a 360 S console or other reason, is against the Xbox LIVE Terms of Use, hardware tampering and modification. Modifying your hardware can lead to LIVE account suspensions and/or console bans.
In addition, discussion of this subject on the forums is against our Xbox LIVE Code of Conduct, and as such may result in a suspension or ban from the forums or the Xbox LIVE service itself.
From the Terms of Use:
12. Service Operation and Equipment.
Any attempt to disassemble, decompile, create derivative works of, reverse engineer, modify, further sublicense, distribute, or use for other purposes the Service, any game, application, or other content available or accessible through the Service, or any hardware or software associated with the Service or with an original Xbox or Xbox 360 console is strictly prohibited and may result in cancellation of your account and/or your ability to access the Service, and the pursuit of other legal remedies by Microsoft. Microsoft may take any legal action it deems appropriate against users who violate Microsoft's systems or network security, this contract or any additional terms incorporated or referenced in this contract, and such users may also incur criminal or civil liability.