The problem is that the only eeprom backups he has are from after the eeprom got fried, and thus are (apparently) useless. The only good backup he has is locked on the HDD.
One possible solution seeing as nothing else is working would be to find an HDD with the exact same logic board as yours, swap the boards, and hopefully end up with an unlocked drive (
http://www.deadharddrive.com/ ). In theory, then you'd get the good eeprom backup off the drive, unlock the other HDD (now locked) with the key, and have two good HDDs again.
While in theory this sounds like it may work, it also may not for many reasons Artifex pointed out in #TeamXodus... But you never know until you try
The master password locking was not added until 2.0 came along, so unfortunatly, if your drive was locked with 1.1 then it will not have the master password set.
The recovery mode does not use keys to unlock the drive.
--Artifex

Now.. next problem
lol
I get a red flashing light when i boot my xbox with the bios.. I think this means bad eeprom.. how to I get my eeprom back to a stable state?
Flash from the eeprom backup you have on your now unlocked drive?
BTW, this brings up an interesting point: It would seem that XOS1 will honor eeprom backups already on the chip, whereas after upgrading to XOS2 or from XOS2 to a new version the eeprom will not appear to be there, and will appear gone (Even though, according to this information, it is actually there). The eeprom backup shouldn't go away unless the user replaces it.
The eeprom backup is stored on the chip's flash in the same area as the chip's configuration.
The format of the configuration and eeprom backup changed drastically from version to version.
Also, note that the chip's configuration area is often partially "destroyed".
If you backup in 1.x, upgrade to 2.x, manage to downgrade back to 1.x, and you still have a valid eeprom backup in flash, you're an extremely lucky fellow.
Generally, you should backup your eeprom after every update or recovery.
--Arti
Bad luck if I've ever seen it
Appleguru and Artifex...
Well I had done the os1.1 backup to eeprom, however when I got to OS2b2 my eeprom was not accessible (invalid eeprom) yet recovery mode could unlock drive (must have looked for backup flash I am assuming).
When I downgraded to OS1.1 i was able to access the eeprom section (never on os2b2 or the pre release).. I also had the option of restoring my eeprom from flash..
Did this unlock the HDD.. but still had an invalid eeprom (but i got the HDD key which was awsome)
I then used cromwell to update my eeprom with a balnk eeprom (since i couldnt find a good backup) and well this fixed the problems... Since i dont care about Live this was a great solution...
One thing i learned was to always backup your eeprom, too bad alot of newbs (like myself) get a chip and do not know about these dangers...
Oh well its fixed and hopefully this can help others along the way if they experience the same problems as myself.