Cheap box mod consists of drilling out the hole at the bottom of the box. This is the same hole the 3.0tdi uses. It also has a snorkel attachment that sits under the front drivers headlight, you can buy this separate and add it if you like but just removing the blanking plate will suffice.
MRC uses a BCM filter, these are a dry foam filter as apposed to a K&N filter that uses oil to filter. Lots of posts about the oil from K&N ruining you MAF. I will not get into the fight about what filter is best.
I would recommend sticking to the OEM paper filter, save your money and just chang it more often. I'm sure a clean paper filter let's all the air in that the engine needs and filters it properly.
To let out the noise then there are a few who cut holes in the top of the box, this will let some noise out, I'm sure the OEM box for the S7 uses this technique. But you need to keep it small enough that the box still has positive pressure from the cold air feed from the front grille and your new hole (3.0tdi) at the bottom, this will stop warm air getting sucked in through your new "noise hole" at the top.
New 034 Motorsport intake pipe will help with airflow and with noise as the OEM disrupts air flow and has a resonator box thing on it to reduce noise.
If done right the whole thing can be a nice project and look good after.
OEM S7, Audi put the hole in for some reason. So it must do something.
Modified S4 box. Perhaps a bit much hole when compared to S7 above. A smaller hole will still let out sound and reduce chance of sucking in hot air from the engine bay.
A4/5 3.0tdi box and snorkel.
Thread with more detail.
Airbox mod thread with some useful info.
And to really understand airflow and filters then read through this.
Info Overkill