I've had this problem myself. The problem is that softmodded bioses don't seem to be easily editable, like bioses for chipped xboxes are.
Changing the LED colour within your dashboard settings is all very well, but that only comes into effect when the dash loads. I want my LED colour to change as soon as the bios kicks in (so if someone cold-boots an NTSC game on my PAL box, the red light comes on and they know not to connect to Live under any circumstances or I'll kick their ass!!)
With a softmod, depending on what bios you're using, it is possible to change the LED colour. Find the bios file on your HD - there should be two files, xboxrom.bin (the bios) and boot.cfg (the config for the bios). Edit the boot.cfg file - if there is a line near the bottom that says something like "LEDsequence gggg", change the g's to r's. Your LED should now be red when booting to a modded state.
If the line's not there, you'll have to change your bios - I think M8 is a good one that lets you change the colour this way?