Originally Posted by icestar2
I would imagine that would all be hosted externally on a server unless you actually bought some yourself which you wouldn't.
Actually, they were all downloaded to your hard drive in the last big upgrade. Some people found out how to unlock them on the hard drives without paying and consequently if you look at the forum on xbox.com that deals with people whining about being banned (Account suspensions and Player Feedback), you'll see a load of people recently had permanent account bans for "for modification and/or theft of marketplace assets". When you buy a piece of avatar clothing or whatever, the download is just some code to unlock it on your xbox. The actual avatar stuff is already there.