Anytime you mod any system you violate the TOS of the manufacturer.
So what this means if you put your harddrive from the banned system on another modded 360, then you risk being banned.
This question has been answered already.
Not to be mean, but do a search before posting because the moderators on here can ban you from here if you do not search before posting.
There is no way to tell how M$ is banning right now.
I am in the process of trying one theory. I am going to go on live with just originals after waiting 1 week of just connecting to live and downloading arcade trial games and playing them offline single player, then after this week if I still not banned, then I am going to play original games only on live to see if I get banned.
Option 1 - If I get banned, then I know for sure they can detect the firmware being modded, not a backup or for those who play early releases will also know it is the firmware not the bad backups or early release of games.
Option 2 - If they do not ban me, then it is probably going to be bad backups or early releases of nonoriginal games that causes the bannings lately.
I hope that my theory is proven to be option 2 and I do not get banned, but if I do get banned, I am not going to cry because all I use live for is arcade games (I play offline only) and movies.
So time will tell, but for now all I am doing each day is connecting to live and just downloading trial games and playing them offline.
Then in 1 week I will play original games online only.
We will see then exactly if M$ is detecting just the firmware.
I surely wish C4Eva will post on here what his thoughts are.