Ok I'm gald to hear I'm not the only one with this problem (although I wouldn't wish this to anyone!) and that the xbox-linux folks are working on bettering the fatx module.
Here's an update on my situation (the end result being a thouroughly corrupted drive):
* I restored root files of the C drive from a backup and got the Xbox booting again. So the xbox refused to boot because of messed up
system files, not the corrupted FAT.
* I notice my E: looks wiped out. With bigfonts I boot into EvolutionX and decide to check if I can still see saved games from the MS dashboard. I launch the [xft modified and known to work] MS dashboard from Evox.
* All hell breaks loose. Box reboots once and then can't boot. I can still mount hdc51, but doing an ls doesn't do a directory listing - it displays what seems to be parts of evox.ini along with garbage characters.
At this point I'm thinking I should just zero the drive out and start from scratch.
* I boot in 98SE (don't have 2k or XP) and try to zero out the entire drive using xhdprepare. Doesn't work (just hangs + not accessing the disk). However, zeroing out the first 4096 works.
* I mount hdc51 in xlinux. No luck, corruption still present.
* Since xhdprepare doesn't seem to be working for me, I decide to use 'dd if=/dev/zero of=/dev/hdc bs=512k' in xlinux to zero out the drive. Seems to work, although it finished with an "Out of space" error message.
* Now that the drive is zero'ed out (not possible to mount partitions anymore), I use xhdprepare on the first 4096 to put the partition info back in there.
* Mount hdc50 and hdc51 in xlinux (for some reason hdc52,53,54 are unmountable). Doing an ls on either partition now shows A BUNCH (exactly 256, in fact.. interesting) of "No such
file or directory" entries.
Trying to copy files from my backup is unsuccessfull because I get a "No space left on device" error message. Which is weird because 'df' clearly shows the drive is empty.
Filesystem 1k-blocks Used Available Use% Mounted on
[others left out]
/dev/hdc51 511904 0 511904 0% /xbox51
/dev/hdc50 4998768 0 4998768 0% /xbox50
So I end up with a seriously corrupted hard drive.

I want to start from scratch, but xhdprepar "entire drive" doesn't work for me (anyone else?), 'dd' didn't work, I have no low level format option in my BIOS and I cannot format using the Evox format command because I can't boot into Evox (or anything else that runs on the xbox for that matter).
Any ideas? I'm starting to think about using winhex or ghost to copy an original HD bit for bit. Another solution is to give up and buy a mod chip so I can boot in evox and format the drive, but I've worked so hard so I wouldn't have to buy a chip..
I think it should be written somewhere in big bold red letters that pretty much only 'cp' and 'rm' are "safe".
Thanks.