it's not a problem with the cable, it's a problem with your monitor...
... actually it's not even a problem at all, it's designed that way specifically.
basically there are several types of "color space" that is to say how xVolts translates into a value for red, or green, or blue, etc.
PC color space is different then HDTV color space... the Xbox produces an HDTV color space but your monitor might be expecting PC color space, the result is a washed out picture. There are no options in the Xbox to change the output color space, Some HDTVs will have a setting to change it and a few rare monitors as well, but most of the time PC monitors do not.
So nothing is wrong, it's not anything MS has to "fix" you're just using 2 devices that weren't meant to work together...
some people will experience a washed out picture, some people will not.
Generally speaking the VGA transcoders will change the color space when the convert, so if you experience a washed out picture on your monitor with the MS vga cable... transcoded component probably WONT be washed out. Similarly if your monitor displays the MS VGA cable's signal perfect then a transcoded component signal will probably look too dark.
I'd recommend against a VGA transcoder unless you have no other option but VGA and the washed out colors REALLY REALLY REALLY bother you... transcoders can sometimes add a delay to the video signal, and their resolution options are severely limited.