it's ill-advised to attempt to work on an Xbox harddisk from within Windows. last time i checked, all current software for that was extremely buggy and annoying. i have had great results with a Linux-based tool called xbhdm 1.9. with this package in Windows you can create a bootable CD image. to use the utility, you burn this disc, then hook the Xbox harddisk you need to work on up to the primary master IDE channel of your computer and boot from some optical drive on the same system. xbhdm will boot into an easy to use linux-based menu system with a lot of automated scripts for various chores, and you can also run a utility called Midnight Commander, which essentially gives you a rudimentary GUI for basic file operations on the FAT-X drive (i.e. rename, delete, copy, paste, and move files & directories).
hotswapping is somewhat difficult to figure out and generally is just a bad idea. the basic theory is that the Xbox uses a little-known system-level harddisk security mechanism called locking. a locked disc cannot be access in any way by the host system until an unlock command with the correct password is issued by the system. for Xbox harddisks, the password is calculated based on the serial number of the xbox and some other factors. the serial number is present in the EEPROM of the Xbox, which is why it's generally a good idea to get an image of the EEPROM ASAP when working on an Xbox. without the EEPROM you can't unlock the drive in the usual manner (which is the pickle you're in now).
last i checked, the actual process by which the Xbox system handles the harddisk and its unlocking wasn't fully understood. it seems that at some point during the boot sequence, the drive is unlocked by the Xbox. the idea with hot-swapping is that you boot the Xbox with the drive properly connected, and the drive is then unlocked until it loses power or a lock command is issued. it is true that the Xbox seems to spin down the harddisk during periods of inactivity. this is a fairly normal power-saving measure.
i believe the xboxhdm 1.9 utility has a script to restore the Xbox harddisk back to the normal retail state. i would suggest using this utility with hotswapping to restore the locked harddisk to retail, then re-install ltools in the usual manner.
the procedure for hotswapping seems to be:
-affect neccessary preperations on the host PC system (i.e. burn your bootable CD, open the chassis, unplug and re-route cables to provide a nice place to quickly hook in the Xbox harddisk).
-affect neccessary preperations on the Xbox system (set it up within a few feet of the computer system, open the Xbox chassis, install one or more molex cable extensions
--It may prove most effective to use a second computer PSU to power the Xbox harddisk. this is probably the best method because the Xbox system can be powered down without affecting the harddisk's power.
-insert boot CD on PC system and then shut it down. reboot, set up Boot From CD options in BIOS if neccessary, then shut down again.
-boot Xbox with an original game DVD.
-get to a portion of the game which doesn't involve any changes. i would suggest either pausing the game, or simply going into an options screen and idling there. either way you need to consider that the Xbox harddisk contains 3 partitions dedicated specifically to acting as scratch/swap data spaces, and so any activity within the game could cause data to be read/written on one of these partitions. once you've found a good idle point, start a stopwatch or take note of the current time. I would suggest a wait time of 10 minutes, but if you've got discerning ears you should be able to hear when the harddisk spins down.
-at this point i'm not sure exactly how to proceed, but in theory you can simply disconnect the Xbox harddisk's IDE cable, then connect the harddisk to the host PC system.
-once you have the still-powered Xbox harddisk attached to the PC system, you should be able to boot that system and have the disk recognized. this can usually be verified by booting into your BIOS menu and checking the IDE devices.
-assumng the BIOS sees the harddisk properly, you should now be able to boot with the xboxhdm 1.9 CD and affect the repair.
-with the repair complete, shut down the PC system, then turn off the Xbox system.
-re-install the Xbox harddisk to it's normal state, then attempt to boot to the MS dashboard.
I suppose this indicates that system modders may want to use a UPS during mod installations...