I think you are getting confused between Games Library and Played Games history.
The Games Library only ever showed Arcade games, demos and trials. It was your Played Games history that showed the list of all the games you have ever played.
Well duh....it needs the disc to install it...also, you still need the disc in the drive to play the game even once its installed....this is to prove ownership of the game, but it will run from the HDD. If you could just install games and not have the disc, then MS would be heavily promoting piracy....
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