I'm using XNA 4.0. How can I load and save settings when on the Xbox? And can I write to and read from files?
You will be able to read and write from any flat file (XML, JSON to name two), you can also use SQLite with XNA 4.0
Here are some samples from microsoft
You should use IsolatedStorage for settings specific to a particular console (resolution, volume, etc.), and StorageContainer for save game data (that gamers should be able to back up & take with them).
StorageContainer data allows the player to select on which storage device to write the data, whereas IsolatedStorage writes on the same device where the game is, no questions asked.
For your game to successfully pass review on XBLIG, you'll need to ensure all cases work correctly (cancelling the device selection dialog, handling removal of a storage device, etc.)