I have the EXACT same issue with a brand new modded XBOX 1.6b, 200GB hard disk, SmartXX.
I dont believe 'reformatting' or 'cleaning off the drive' will help this situation, since I just did that TODAY. Its a brand new machine.
The drive is practically empty. C 300MB free, E 4800MB free, F 180GB free. Only one game on it.
Playing emulator seems to work well for a long time but playing games off HD will crash after about 30 minutes.
Testing HD temp after playing emulator came up 116F
Testing HD temp after playing game off HD 140F
My guess is this is a heat issue, created by constant disk access such as video or audio off of a game. The system does not respond with the typical overheat color. It just locks up