When you use the SP adapter, are there any un-used pins left over sticking up from the adapter after slotting the chip into place? I ask because I'm wondering if it could be the positioning of the chip on the adapter thats the problem. I know the solderless black adapter has more pins then the Xeniums need (to cater of other chips) but I haven't looked to hard at my SP adapter as I haven't needed to use it).
The fact that you get all five LEDs on the adapter lighting up says that component of the install is fine. Just to be sure, are you mounting the chip inht correct orientation such that the LED at the bottom of the chip is toward the left hand side of the box (as you look at it from the front)?
If there's no left over pins meaning positioning isn't the problem and its in the correct oritentation, I'd try performing a Xenium OS recovery. To do this you'll need to download the ISO version of the latest Xenium OS and burn it to disc with Nero (right click the iso image, select open with nero, make sure write at once is selected, select finalise disc, set burn speed as slow as possible and verify the data). Open up the box and flick the switch on the side of the chip into the recovery position (I cant remember which position is which....I think recovery is when the switch is closest to the TOP of the chip). You might also like to check whether or not the chip has actually been shipped to you in recovery mode (if it is, switch it back to normal mode and try again).
To do the recovery, you need to boot into the XOS with the recovery disc in the drive and the switch in the recovery position. If you can't get the drive to eject whist its fragging to insert your disc, remove the SP adapter to get back to a standard non-modded box, insert it then and power down. Be careful not to tip the drive up and dislodge the CD from the tray when you remove it.
I hope this helps.
ohh almost forgot, because your box is a 1.6, you wont see the Xenium splash screen during the recovery process like other versions. The LED on the front of the box should however still cycle (orange i think) and the box will eventually power itself down (may take a couple of mins but no more then 5 mins if its worked).