the x360key is still under instruction , how can you get it now , and yes, when you get it , you need to install it ,and have to open the xbox360, it is available for both silm and fat, dont worry abour your dvd key...
To the OP, Yes, you do have to have your key to flash new firmware...you can obtain it by dumping the drive's firmware before you flash. Follow the interactive jungleflasher.pdf tutorial for your specific drive from beginning to end.
"All drives should be updated to Lite Touch + (LT+) firmware if playing on XBOX live. Samsung drives and pre-78/79 Hitachi drives do not utilize AP 2.5. All other drives are considered to be detectable by Microsoft (YMMV). Make sure all rips are ABGX verified, contain SSv2, and patched AP2.5 (where needed). XGD3 must currently be burned on new drive with PC Burner Max firmware for 100% rip. All modded consoles can be potentially unsafe for use on XBOX live."