Alright, that package you buy comes with a vga converter thing, so you plug the vga from your computer in one side of it and you plug in the vga from the xbox cord thing into the other.
As for sound, it also comes with a Y adapter. So you plug those red/white cables into it and put the other end in your line-in input on the back of your computer.
I found a pic of the stuff, so it'll probably be easier to understand
