Read this again: http://forums.xbox-s...howtopic=332179
DaddyJ's comments:
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**If you are doing a hotswap in BLIND mode (No tv hooked), then I found in my experience, that if your using the Error 12 method, that you should disconnect the Xbox HD IDE at the exact moment that the LED goes to RED Flashing. (By EXACT, I mean pull the cable out exactly when the LED changes, watch it a few times before doing it, count!)
I have never had any problems hotswapping at this exact moment.
You are not doing the hotswapping correctly.
The jumper positions should be indicated on a diagram on the hdd somewhere.