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The Xbox 360 and the Xbox One
You can not get the Simpson's hit and run on Xbox 360 the latest release was on Xbox, PlayStation 2 or Game Cube
When the Xbox says install game it does not mean you are about to install the full game onto your hard drive. When you install a game on to your Xbox it's taking some of the game files and installing them to make the game run smoother and possibly look better.
Your Xbox should ask you to delete an avatar when you run out of space for one
A Microsoft XBOX 360 does not run an emulator. You can only play XBOX based games. Any XBOX 360 that has an emulator to play non XBOX games is a modded XBOX 360.