ok, I am having this problem right now, Ice w/1.6 Pre-release that comes on it. I turn on the Xbox, boots to the XOS menu, 5 seconds later I get the "exception" error that the OP described, then it just reboots the xbox back into this infinate loop. I tried to FTP over quickly but no luck. Also tried to update to OS2 Beta 2 via CD-R (which I have done dozens of times already on other 1.6's) by selecting "recovery mode" then insert the CD on reboot. This one sits at a black screen, LED on front flashes orange for a minute, then solid red, the entire time NO LIGHTS on the Ice chip (on others it would flash multiple colors during flash). The Ice does light up on first boot when going to the XOS, but that stupid Kernel Panic error is stopping me from doing anything else.
Nevermind.. fixed it.. stupid clock lost its setting after only 30 mins unplugged. Once I removed the chip, booted normally, set the clock, then put the chip back in it now works, although I still cant flash to Beta 2 for some reason.. will try reburning the CD, even though it worked on all other Xbox's and this one has a new Samsung drive as well..
edit2: ok, now this is weird.. thought everything was working good, booted up my trusty Evox HD prep CD-RW, and it booted without the evox.ini for some reason (from the MS-Dash). I still tried to backup C&E but the xbox turned off midway for no reason. I turned it back on, and this time Evox booted fine with the .ini and let me finish my backup. These are some weird problems..
Final Edit: lol.. well, finally got Beta 2 on but only via HDD method. Prepped the 250G with Evox, now copying files back to C&E then time to fill up F and have this thing delivered tomorrow. I think everything is ok now.. no more oddities happening. I feel like an old geezer now.. "Back in my day, you didn't have to worry about Modchip OS's.. just install the chip, flash a bios, and worked flawlessly.. these newer Gen mods seem to be more problem than they are worth.. I sure miss the Chameleons.. great chips.