Although the image is quite good with the standard Xbox cables, I would get the Microsoft Xbox High Definition AV Pack, but with the push of Xbox 360 lately, it's almost imposible to find any games or cables for old Xbox systems. If anyone knows where I could order it in Europe, I would really appreciate it. Thanks.
Update 01 Feb 2008:
I finally got a brand new Monster GameLink 400X cable on eBay for a fair price (although the shipping from US was more than the cable itself :-) and it looks the image has improved with the component compared to the the standard Euroscart connection - the texts in XBMC are cleaner and colors are brighter - and this is in standard 720x576 PAL 16:9. Apparently, in order to be able to change to change to HDTV resolutions I have to switch the XBox from PAL mode to NTSC using a tool called Enigmah PAL/NTSC Selector - looking forward to do that this weekend.