If you were to try to then sell the game/port, you'd get a cease and desist letter real fast. I'd also imagine they wouldn't want you putting it on any official app store, regardless of whether it's free or not.
Until then, just people working on a port of a game as a hobby isn't likely to cause anything bad.
Depending on the game, mods can be gray area when it comes to legality. Some communities have avoided legal issues by claiming that they are just making a mod instead of a new game. There have been large modding communities that make sure that at least some part of the original game is needed for the mod to run, so that it can count as a mod and not a separate game. But if you started making money off of it, mod or not... that's when lawyers would start chasing you.
There was a popular mod called Halo Custom Edition that never got taken down by Microsoft, so I don't think there's much to worry about here as long as you don't sell the game.
But it really depends on the company! Nintendo, for example, is very strict about its IP, and has taken down countless mods.
So all in all, it's gray area.
M$ is nicer than most. They tend to send a cease and desist notice first, but I would rather not provoke them. Moving an antique game to a crappy platform for free would likely just get you one of those. It would not be fun to be selling copies of it, though. Hey, if you get it working, send them an email and ask them if you can distribute it or sell it back to them for a small fee. You never know.
The project is legal, yes.
As long as we don't make a profit and ask for 343s permission to port the game and use it's resources.
This is a passion project. but before we contact 343 we want to have atleast the first mission working.
If we don't get permission we will still continue the project but won't publish it.
Join this discord if you wish to learn a bit more
Honestly I would not bother trying to get permission, because you're almost certainly not going to get it. At least not for free, so it'd be out of the question for hobbyists.
I myself am working on a similarly gray area project (it's a rewrite of Pokemon gen. 1 in C++) and my policy is "continue until told to stop; release P2P if told to stop".