We present a pair of high-resolution smoothed particle hydrodynamics (SPH) simulations that explore the evolution and cooling behavior of hot gas around Milky-Way size galaxies. The simulations contain the same total baryonic mass and are identical other than their initial gas density distributions. The first is initialised with a low entropy hot gas halo that traces the cuspy profile of the dark matter, and the second is initialised with a high-entropy hot halo with a cored density profile as might be expected in models with pre-heating feedback. Galaxy formation proceeds in dramatically different fashion depending on the initial setup. While the low-entropy halo cools rapidly, primarily from the central region, the high-entropy halo is quasi-stable for ~4 Gyr and eventually cools via the fragmentation and infall of clouds from ~100 kpc distances. The low-entropy halos X-ray surface brightness is ~100 times brighter than current limits and the resultant disc galaxy contains more than half of the systems baryons. The high-entropy halo has an X-ray brightness that is in line with observations, an extended distribution of pressure-confined clouds reminiscent of observed populations, and a final disc galaxy that has half the mass and ~50% more specific angular momentum than the disc formed in the low-entropy simulation. The final high-entropy system retains the majority of its baryons in a low-density hot halo. The hot halo harbours a trace population of cool, mostly ionised, pressure-confined clouds that contain ~10% of the halos baryons after 10 Gyr of cooling. The covering fraction for HI and MgII absorption clouds in the high-entropy halo is ~0.4 and ~0.6, respectively, although most of the mass that fuels disc growth is ionised, and hence would be under counted in HI surveys.