If you do not delete the personal files on the hard drive before you sell the system the new owner will be able to watch, hear and view them just like you did. What Microsoft did not tell you is that it is likely to recover the files even though they have been deleted by connecting the xbox hd to a computer. File Recovery tools work on xbox hard drives as well.

If the new owner knows what he is doing and suspects you had some personal files on the hard drive he might want to take a look. The same holds true of course for every other sort of storage device that you are going to sell. It is possible to recover files even though you deleted them.

The only secure way that I know that would delete the files safely would be to connect the hard drive to your pc and use a tool like eraser to erase the personal files on it.

You need to unlock the hard drive of the xbox before you can access the xbox hard drive in windows.

It is also a good idea to remove account data from the system before you are selling it, this can be done from the menus provided which means you do not need external tools for it.