as far as i know, according to the dmca (in the US of A), anything that allows for the use of pirated material (even if you had no intention of using it for pirating) is illegal. this is where the whole dvd backup thing hit trouble with the law. even though somebody was trying to mess around with DVD's that they owned, breaking the encryption that protected them is illegal. (the guy was actually just trying to watch dvd's he owned on a linux based machine....i can't believe they viewed that as illegal!!)
i don't agree with it at all. not that i'm for piracy....i just think that i should be able to backup games i own. i also have a 1.0 box with an ailing dvd drive. if it weren't for hard drive upgrades, it would be a paperweight soon.
as for selling them on ebay...i've seen xboxes offered with "tons and tons of games". i'm assuming they're not planning on sending you a big box of retail games along with the xbox you're getting, so personally, i wouldn't worry about things that are "kinda" illegal when there are so many instances of things that are "blatently" illegal in the same arena, y'know? at least in your situation, it's in a legal gray area. are xdk built programs the property of ms? it's still up in the air. and as for bioses....if you're really worried you could just use nkpatcher right? that's completely legal i think...