Hey,
I have put many a matix in. Personally I have never had to "Prepare" The d0 point. As far as your chip alignment goes. You should have no probs getting the chip to go red at all. You have a 1.0 xbox so the lpc should be filled. My personal technique is to place the xbox on my desk. Get parell with the xbox looking at it from the front. If you look at the right angle you can see the d0 point and the pogo pin.
Are you also using the 3 holes that are used to align the pin around the d0 point.
My advice is this. I have never been able to get the chip to line up right when just pressing it down flat. You must first get the d0 point in.
If you are able to ensure that the pogo pin is in d0. You should be able to apply pressure to the middle of the chip and the led should go green right away.
All i can say is good luck.. My first chip took me about a hour to get green.
Now i can do it in under 1 min.
dont give up
good luck