You will definitely experience lag. I use a HD capture card to make videos, and even with a component connection I get lag. It’s not worth using your laptop as a monitor unless you can somehow directly connect it. If your laptop has a VGA port you can try that, but I’m not sure how it would work since it’s usually output. I’ve seen it done though.
EDIT:
Here’s what I found with a quick search.
Yeah there’s nothing much to it, you just need a tv-tuner and the necessary audio cables to turn the two RCA connectors coming out of the 360 into a male audio connector to go into your mic-in or line-in port on your laptop.
HOWEVER:
Some TV-tuners have a ‘lag’ between the input and what’s displayed on the screen/played out through audio. This is no issue when you’re watching some TV, but if you’re playing a video game and dictating what happens on the screen by using a controller, it’ll piss you off. I’m really not sure how you’d go about finding out whether or not a specific TV-tuner will have any associated lag or not.
One idea might be to buy a cheap USB tv-tuner at a brick and mortar that has an exchange policy for opened hardware AND several affordable models in stock. That way, if the tuner you try out doesn’t work out, you can try some more and hopefully find one without lag.
ALSO:
before buying the tuner, you’ll want to verify that you can un-mute the input or mic-in on your laptop so that you know that sound going into it is immediately played through the speakers. You can use software (media player classic for example) to play-back the audio that’s coming in through the line/mic-in ports, BUT doing so will cause an annoying audio delay. Just enough of a delay to be really annoying, like you notice that the ‘swoosh’ sounds don’t sync right with the menu changes in dashboard, or lip/sound being off-sync with video. So make sure your hardware will just do it out of the box by un-muting the line/mic and checking with a microphone (I assume the laptop has it’s own mic --brace yourself for feedback.)
If line/mic in won’t work un-muted, you can connect the 360 directly to speakers with audio converter cables but if you’re hooking up to a laptop you might not have speakers to connect to.
To sum, you need the TV tuner, an audio cable with two female RCA jacks on one side and a male headphone jack on the other (to plug into your laptop’s line-in or mic-in port and into the 360’s left/right audio RCA ports).
And you’re in business.
You’re better off buying a $150 dollar monitor dude.