Ah the linkstation. Fantastic piece of kit. I've got mine set up so I can FTP into it from home, and I can even connect to the Bittorrent client for when I need to download the latest version of Ubuntu. >_>
Anyhow, when you say compatible - do you mean as a storage solution for games, gamertags etc? Because it's probably not. It's formatted to ext, and even if you could plug it in to the 360 (which you can't - it connects via ethernet with a USB port for plugging
additional USB devices) - I'm sure the software on the device will not take kindly to a console reformat.
But, if you are looking for it to stream media content, then it works with the 360 perfectly. I've moved all my movies and TV series to it so I can give my desktop a break.