Yes it has all the cables included.
Yes the sound comes through the internal speakers, although it sounds like you may have to adjust your sound settings on your xbox if it's not working with your tv. If you can get the sound working over HDMI with your tv it will work through the iMac Speakers.
Hmmm. Wonder why it didn't work when connected to my TV. Could it be due to an old (pre 1.3) HDMI cable?
Anyway, I think I'll just wait for the DR Bott to arrive. I've tidied all my cables next to the iMac now and I don't want to cut the cable ties and carry the Xbox downstairs again...
BTW, what inputs and outputs does the Dr. Bott have?
Steve.