Matt Helgeson, a senior editor at Game Informer has reportedly confirmed that the story is not an April Fool's joke like many readers believe it to be.
Along with the pictures and the specifications, there is mention that existing owners can choose to purchase the larger HDD for "under $200 USD".
However, the current external HD-DVD drive will continue to be an external accesory and Microsoft official statements repeat that the console will never include an internal HD-DVD drive.
Chris Satchell, the general manager of the game development group for Microsoft had the following to say about the rumors: “We're always working on prototypes and new technologies and just playing with stuff in Redmond to see what's interesting. I think at the moment we have the widest available connections on the system. If you want to get great HD, I think we've got a good solution for that.”
“At the moment, everything you might have seen is just looking at our experimentation back in Redmond, not really a product that we're thinking about announcing,”
Source:
Dailytech