Bungie has posted their explanation for why Halo 3 loads slower once installed to the hard drive of a 360 through NXE. It’s the games way of caching maps basically.
The game doesn’t know it’s already on the HDD so it re-copies the map data to the ”utility partition” to cache the data; all this reading/writing ties up the HDD slowing it.
That’s it in a nutshell anyway but Bungie have of course gone into a much greater detail for the nosier gamer amongst us. Sadly a patch is unlikely to be made because of the time and resources it would eat up at Bungie, and besides the game works fine off the DVD.
”So when Halo 3 runs, if a HDD is present, we copy maps from the DVD to the utility partition (on the HDD). Think of it as an on demand install of Halo 3 to some scratch space on the HDD,” explains the dev.
”Halo 3 doesn’t actually know where it’s running from, so it always assumes it’s running from a DVD.”
Click here to read the full ‘Halo 3 & NXE’ explanation from Bungie Studios.