THIS IS WHAT HAPPENED TO ME:
i have an xbox that had the onboard bios flashed by using the enigmah
FIRST:
in nba2k3, i went to the play live section and then it said that it didn't find any accounts and asks if you would like to load the Xbox Dashboard to create one. I said yes and it went to the xbox dashboard (not evox dash) and it said that it was configuring my xbox and after it did that, it added a little xbox live tab in the xbox dashboard.
THEN:
i restarted my xbox to get back into my game, and it wouldn't work. It went straight to the xbox dashboard instead of the evox dashboard like it was supposed to. It didn't really make sense to me, so i kept trying and it kept going to the xbox dashboard. The xbox still played originals but i couldn't get my evox cdrw to boot. So i thought i was completely screwed and i thought that the update somehow reflashed my xbox's bios to the original and thankfully this was not what happened.
After a bunch of retries of burning evox to a cd-rw, i FINALLY got it to burn right using different settings in nero and it got me right into the evox dashboard and when i connected to it from my computer via ftp, my C drive was all rearranged and messed up....there were more folders and less files...i was completely confused, but with the help of friends, i got the new evox 1.8.2812 and copied the dashboard from that and the evox.ini from that and put them on the xbox C drive and i renamed the dashboard file that was on there to Xboxdash_old.xbe and i restarted and it worked fine
SO, if you accidentally run the update in nba2k3 (which IS the update.xbe that is so feared around here) you should still be ok if you burn evox to a cdrw and boot it up and then put on evox again.
After you do this, your xbox will be able to go to the msdashboard that has the Xbox Live tab and then come back fine. Now when you go to the "Create Account" section in the games such as nba2k3, you will be able to go to the xbox dashboard to create the account and then you can leave and go straight back to evox with no problem
this leaves you with a xbox that does not need to have the ybox bios and it is completely "live update" proof
now im only saying this for my current setup which is the onboard bios being flashed from the enigmah chip. As for other setups such as the xecuter mod being in your xbox, i do not know how they will react to this same update.