I have yet to be banned from LIVE.
My xbox specs:
250 GB HDD
Xecuter 2.3b Lite flashed with latest evox (Bank 1)and Xecuter BIOS (Bank 2)
There are roms and games in E: and C: drive but no french saved games (or whatever you call it)
I logged on to live for the first time after I modded my system in early 2003 however, I replaced my hard drive and eeprom six months later due to hard drive failure and I accidentally banned myself. Therefore, hard drive and eeprom no longer matched. I am not saying that the hard drive and eeprom marriage is false. I think the patch/update that allows M$ to record your hard drive and eeprom was only released recently (September 2004 I heard). So if you changed your HDD and EEPROM recently, chances are you will be banned. However if you have done the replacement prior to the release of patch, you are OK.
I bought HALO 2 last week. I have been playing HALO 2 on LIVE (chip off) for 5 days now using the 250 GB hard drive and still have not been banned. I have been playing my stored games as well. Maybe I am doing something that is preventing me from getting banned. I am not exactly sure.. but what I always do is, I connect my ethernet cable only when I am ready to play on LIVE and disconnect the cable afterward. Most of us are aware that some games attempt to connect to LIVE automatically. You will most likely to get banned if you were playing this game with chip on. So to ensure that games will not be able to connect to live, do not leave your ethernet cable connected to your xbox at all times and make sure the auto connect is disabled. Thank you