Bad Storage (source) is a piece of Xbox 360 software developed by EatonZ (also known for creating the FATXplorer app) that allows for the ability to use hard drives larger than 500 GB (the maximum size hard drives that Microsoft officially made for the Xbox 360) on retail consoles by using Bad Update, either with a .DLL file, or an .xex application. It's intended to be used with hard drives & SSDs that are compatible with FATXplorer's HDD/SSD Maker utility, which allows the ability to modified the firmwares of compatible drives to match valid dumps of official security sectors, allowing a retail console to authenticate SATA disks like if they were official ones.
While there are many SSD/HDD models that can use the Xbox 360 SSD/HDD Maker feature, flashing the firmware as-is limits the drive to whatever the security sector is. For instance, if you flashed a 1 TB SSD with the modified CFW, you would only be able to use 500 GB as the max, since that's the biggest official security sector. For an odd capacity like 240 GB, there is no security sector equvilant due to Microsoft never having an HDD of this specific size, so you would be limited to a lower capacity drive's sector (120 GB).
However, with Bad Storage, the drive can be formatted in a specific way that still allows the drive to authenticate, and while the retail operating system don't know how to handle a drive in this special format (the disk will show as unformatted in the dashboard settings), extra kernel patches to allow the drive to mount can be enabled by using a patcher payload such as FreeMyXe or XeUnshackle with Bad Update. This allows you to fully utilize the capacity of any disk size, so long as it can have SSD/HDD Maker CFW flashed.
A fork of Bad Storage is also available on this repo, with enables support for drives without a security sector, just like how an RGH/JTAG console can use unofficial SATA disks. However, to use Bad Storage with the ABadAvatar entry point (which the avatar data to be installed on a system extended partition), you will need to either use a USB System Drive, or an internal/external memory unit.