I have an xbox 360 which will support HDMI out; i was also looking at getting a computer monitor to play it on. Is it better to use VGA or HDMI? And what is the best solution for sound? (My laptop has a good quality creative sound card, if that helps.)
HDMI is technically the better choice, but VGA looks great to me. I don't think it really matters all that much and both of those connection types allow upscaling to 1080p of games and films.
If you get the official MS cables (either HDMI or VGA) they have extra connectors on them for audio, so you can use the optical output or RCA jacks for sound. Do you have some kind of sound system set up in the same room you're going to be using the 360 in? The other option would be to get a monitor with speakers built in, or a small TV instead, although obviously the sound quality won't be as good as using proper speakers, but HDMI carries both audio and video, so that way you could do it all with one cheap third party HDMI cable. You mention your laptop, but if you run the audio through that, you're not going to get the best sound and it would mean you have to have the laptop on all the time when playing games, so it's not the best choice.