Yeah. Use an Ethernet cord or a wireless adapter for the 360. It is very easy. Ethernet is free, but many use an adapter because they do not want cords going around their house. In my opinion adapter are quite expensive. I bought mine for 80 dollars.
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If you have internet access and Xbox Live, yes you are able to.
yes you can surf the internet on the xbox 360,just google it down or something to learn how to do it
You have to have internet access at home and connect you xbox. In the market place from the xbox you can search guitar hero 3 downloads
I believe it can also play DVD's, and the newer Xbox 360 can also access Facebook and Twitter if you have an internet connection (might need Live membership though)
you don't need the insurance it comes with a 3 year warranty.