For the copyright thing you should take a look at this.
http://www.xbox.com/en-US/community/developer/rules.htm
Quote: "
Game Content Usage Rules
We know that people like you love our games and sometimes want to use things like gameplay footage, screenshots, music, and other elements of our games (“Game Content”) to make things like machinima, videos, and other cool things (your “Item” or “Items”). We’d like to make that easier for you. So long as you can respect these rules, you can use our Game Content to make your Items.
What can I do?
Here’s the magic words from our lawyers: so long as you respect these rules, Microsoft grants you a personal, non-exclusive, non-transferable license to use and display Game Content and to create derivative works based upon Game Content, strictly for noncommercial and personal use. We can revoke this limited use license at any time and for any reason.
If you share your Items with your friends or post them on your web site, then we’d also like you to include the following notice about the Game Content. You can put it in a README file, or on the web page from where it’s downloaded, or anywhere else that makes sense so long as anyone who sees your Item will also find this notice.
[The title of your Item] was created under Microsoft’s “Game Content Usage Rules” using assets from GAMENAME, © Microsoft Corporation.
You can also put a link to this page so people know what the Game Content Usage Rules are.
So what does that mean?
We're giving you some very broad rights to create and redistribute content. You don’t have to post the content on your own site – you can link to a third-party site containing your Items if you’d prefer to store them there.
And by the way, these Rules only cover games published by Microsoft Game Studios and where Microsoft owns the copyright. We can’t give you permission to use games from other publishers or games where Microsoft doesn’t own the IP. Sorry, but you’ll have to contact them for that. Where you see a link to this text on a game’s community website, then you’re good to go. As you can see, this will give you access to some of the most popular titles on the PC and Xbox 360, including:
Age of Empires (all versions)
Flight Simulator (all versions)*
Forza Motorsport (all versions)*
Halo: Combat Evolved, Halo 2, and Halo 3
Kameo
Perfect Dark Zero
Project Gotham Racing (all versions)*
Rise of Nations (all versions)
Shadowrun
Viva Piñata
* Use of individual vehicles may require permission from their manufacturer.
For other Microsoft Game Studios games, you’ll want to look on the community website to see if there’s a link to these Rules. If there is, you’re good to go.
Are there restrictions?
It’s tough to predict everything people will do, but there are some things that you can be sure will get our attention.
You can’t reverse engineer our games to access the assets or otherwise do things that the games don’t normally permit in order to create your Items.
You can’t use Game Content to create pornographic or obscene Items, or anything that contains vulgar, racist, hateful, or otherwise objectionable content. We can’t help you much here except to say that just like the old saying goes, you know it when you see it.
You can’t sell or otherwise earn anything from your Items. We will let you have advertising on the page with the Item on it, but that’s it. That means you can’t sell your Item, post it on a site that requires subscription or other fees, solicit donations for your Item of any kind (even by PayPal), use it to enter a contest or sweepstakes, or post it on a page you use to sell other items (even if those other items have nothing to do with Game Content or Microsoft). This doesn’t restrict you from using your Item for film festivals – that’s not our intention, even if you get a prize for winning. But where someone is trying to promote their commercial venture (even just a commercial website) with a “machinima contest”, they need our permission to do this. If they’ve got our permission you’ll know…
You can’t necessarily use the soundtracks or audio effects from the original game. We often license those from third parties and don’t have the rights to pass them on to you. We might mention on the community website for a particular game whether you have these rights, so you’d do well to check. And you might need permission from a third party, especially for games with licensed music. But we’ll confirm right here that the music from Halo 3 is available for your use in non-profit ventures thanks to an arrangement with O’Donnell/Salvatori, Inc., composers of this iconic theme.
You can’t infringe anyone’s IP rights in your Item, even if the IP rights being infringed don’t belong to Microsoft. Among other things that means you can’t use any of Microsoft’s trademarked logos or names except in the ways described in the pages linked from www.microsoft.com/trademarks.
If you add to the game universe or expand on the story told in the game with “lost chapters” or back story or anything like that, distribution of your Item in any form constitutes a grant by you of a royalty-free, non-exclusive, worldwide, license to Microsoft and any of Microsoft’s partners to use that Item for any purpose and without obligation to pay you anything or credit you. (Sorry, but our lawyers tell us we need to do this in order to avoid frivolous lawsuits.)
If you grant anyone the right to build on your Item, anything they create will be governed by these Rules too and we’re leaving it up to you to tell them. We don’t mind if other people help you out, but you have to be clear with them that it’s not you giving permission, it’s us. (That’s how we make sure everyone plays by the same rules.)
If you do any of these things, it’s not impossible that you’ll hear from Microsoft’s lawyers who may tell you that you have to stop distributing your Items right away, or who may tell you that you need a commercial license, or who may have other comments. If you think it’s tough to predict what people will do with game content, imagine trying to peer into the mind of a lawyer…
There’s still a way to do some of these things we’ve excluded, but you have to contact us for a commercial license. If you’re interested in doing that, send a mail to gamevids*at*microsoft.com. (And it’s not that we hate the word “machinima” and are trying to rename it into “gamevids” – this is related to a character limit issue on our server side for automated aliases, not a nefarious plot to rename anything.) And if you’re running a real festival, we’d like to discuss with you because you’ll probably want to do things like redistribute festival DVDs and the like, and we want to help you take care of that.
Thanks, and have fun
"
