From eurogamer.net:

Microsoft has reassured Halo: Reach fans that it's trying to fix an issue that prevents 4GB Xbox 360 owners from playing Reach's campaign cooperatively, Eurogamer has been told.

Owners of the 4GB Xbox 360 (that 4GB is internal memory) who try to join a co-op campaign are greeted by this message: "One or more players do not have the hard drive required for this game type."

This morning Microsoft insisted the limitation is "temporary", but could not say when it will be fixed.
A Microsoft spokesperson told Eurogamer: "We are aware of the issue and are quickly working to resolve it."
Full Story: eurogamer.net