I too have a modded box. I did it so that I could load the games that I own onto my 120 gig HD so that I didn't have to wait for the retarded load times (like on Fable). Also, I've turned it into a media box, so that I can play AVI files, etc. Nothing horrible here.
Well, I'd read that if you mod your box before you get your live account (so that all the parts have the same SN as they did from the beginning of the account), you shouldn't be banned as long as you keep the install stealth (everything is in F:), lock the HD, and keep the chip off when you get on live.
Well, I played Halo 2 for a couple hours last night on Live. Today, I tried to load it up & I'm banned. Guess I'm gonna have to shell out another $150 on an xbox that will probably have the same crap Thompson DVD that my other 2 that have broken will have.