So it seems that installing the Second/'Play' disc to your X360's hard drive isn't recommended; as you'll notice texture pop-in issues. Digital Foundry suggests to install it to a USB Flash Drive + made a wee comparison video below for V's Play disc installed on HDD and a Flash drive.
So that's one solution. Perhaps there are alternate ways to fix this problem? Post your related issues/theories/idea/etc below.
Thought I would post how I solved my pop-in texture problem. Hopefully it will help someone else.
My initial setup : Disk One installed to an Old 360 Pro with 20GB Hard drive. Play disk installed to an older usb hard drive (500GB) that shows up as not meeting minimum performance requirements.
I figured it was the usb drive that was the problem, so I went out and bought a SanDisk Cruzer Glide 16GB (it did meet the minimum performance requirements.) I installed Play disk to this usb and still had the same exact pop-up problems as before (I used the Eurogamer Digital Foundry method of testing the intro cut scene.)
I knew it had to be my 360's hard drive, so I moved my Disk One install to the new Sandisk and left the Play disk on the old usb hard drive. This solved the problem for me.
I haven't tried to format my 360's hard drive to see if that works. Might try that later, but for now, installing to two different usb flash drives seems to work great.
TL;DR If you're still having pop up problems even when you install the Play disk to a usb flash drive, it's probably your 360's hard drive.
So to summarise.
Disk 1 HDD Disk 2 DVD - if you have pop in, your DVD drive is faulty.
Disk 1 HDD Disk 2 Flash Drive >15mbs - if you still have pop in your HDD is faulty
Disk 1 ~ Flash Drive Disk 2 DVD - Has anyone tried this?
Disk 1 ~ Flash Drive (1) Disk 2 ~ Flash Drive (2) - does this work?
I have problems with disk 1 HDD and disk 2 DVD. No crashes but severe pop in and jaggedness, will revert with answer if this solves the problem