I upgraded the Xboxes of my friend and his brother recently, both with X3 chips and new hard drives. Both had been used on Live with the stock hard drive, so we bought two eeproms and did all that stuff. We're using the latest X3 BIOS and have Live auto-signin disabled. At that point, both were identically set up aside from hard drive size.
Over the last week, both boxes were used on Live regularly, mainly playing Halo 2. Everything was fine until we discovered that somehow our copy of the C drive on one of the boxes was corrupt, since clicking on the settings button in the MS Dash led to an immediate Error 21. We copied the C drive folder off my Slayer's disk and that moved the error to the Network Settings dialog, where we decided it was out of the way enough since X3 Config Live can change those settings just fine.
Yesterday my friend needed to reconfigure his Xbox Wireless Adapter, so he needed the Network Settings function (apparently reconfiguring it on another box was not working for some reason). He copied the entire C drive from his brother's box and overwrote his with it. This got the network settings to work.
Unfortunately, immediately after seeing that it worked he tried to go on Live and was hit with a Modded Box error.
I have it set up so that you have to be intentionally trying to end up with MS Dash running with the chip on, and he has two witnesses who confirm that he booted with the chip off to test the dash.
Could the fact that an error 21 occured when he was trying to get on Live with the non-working Network Settings panel be the culprit, or did Live somehow detect the C drive came fron another box, or what?
His brother is still playing fine unbanned, along with my brother and I, and aside from the G drive on the one that got banned, they're all using the same configuration of software on the hard drive.