You should really use the search function next time, but I'll be nice and answer.
The Xbox BIOS contains a compressed and encrypted copy of the kernel -- the secondary boot loader (2bl for short) starts by decrypting the kernel into memory in order to run it, using the RC4 algorithm. If you don't have the right key, it'll output garbage, and the Xbox won't boot. If you have the right key, it'll output a nice happy fun kernel, and the Xbox will jump into it, and puppies will dance and play.
(Just to prevent some confusion, there's actually two RC4 decrypts; the one you're concerned about is the second. The first is done to decrypt/decompress the 2bl itself, and the RC4 key for that is stored inside the MCPX. But that's not relevant to your problem.)
There are tutorials in the xbox-scene archives (and better tutorials in the Phoenix Boot Loader forums) that will tell you how to extract an RC4 key from a BIOS image yourself. Because of that wonderful law we call the DMCA, it is illegal to blatantly ask for the RC4 key for an image, and it's illegal for us to post the keys. So, I'm afraid this is as much help as any of us can give you. Once you get the RC4 key, you save it in the rompath.ini file, and it'll work.
FYI, if you have a 1.0 or 1.1 Xbox, you'll also need EEPROM keys. Again, search the PBL and XS forums for more info on that. And if you want to know about what the Xbox is actually doing when it boots,
this page on the Xbox-Linux project site is quite informative.