staticzer0,
Well, I am experiencing the exact same thing you are. I have an xbox v1.0 and Matrix w/ EvolutionX V2.5.colormod.err.ybox.bin and has been running for a few months. In the past week, I've tried the following:
1) restoring my C: drive from backup
then
2) tried both evox 1.8.2594 and 1.8.458
then
3) attempted to update with two different xbox live setup cd's as well as NFL 2K3
then, finally
4) installed two external switches with LED indicator to ensure that mod is truly disabled
So far, nothing has worked. NFL 2K3 would only display a message stating "xbox live: coming november 2002" when I selected the live option.
Note - I did have an Xtender prior to the Matrix. Maybe this has something to do with it?
Since I've been able to disable my mod, I'm assuming that the matrix bios is not the problem. The only thing left I see is to try another hd image. After hearing so many horror stories of the live update corrupting peoples modified xboxdash, you'd think that the live update would trudge right through my "clean"(?) backup. I guess I could also try even yet another different game to intiate the update.
It's strange that I have not found anyone else (besides you, now) reporting this problem. Please update this thread with any progress.