I have the same problem. Modded my Xbox with Xecuter 2.3b lite +, running XBMC as my primary dash, but have Avalaunch and EvoX kicking around as well. Upgraded to a 120MB HDD. I can rip games to the HDD, play them with abandon, save games no problem, etc...
However, if I boot the msdash (either directly or via avalaunch, but always with the mod chip on) it will start up no problem. I can change settings like time/date/video/etc... I can enter the memory sub-screen, but as soon as I try to examine to contents of my HDD or a memory card, the XBox dies with an error 21.
I've searched quite this site quite thoroughly for a week ("21" is less than 4 chars., how does everyone refer to the Xbox dash? xboxdash, m$dash, msdash? etc...) but to no avail. This is the first time I managed to stumble upon someone with the same problem.
Any suggestions?