When loading a RETAIL M$ bios, you're in no risk of getting banned.
Best way to try this, if you're not sure, is booting with the "Original BIOS" option, and pop in a working backup of yours. If it works, your modchip isn't deactivated correctly, if it tells you to put in a cd/dvd that the xbox can recognize, voilá, you're running the right bios, and you can play Live.
When turning your chip off, M$ bios should load itself though, but try it out with the backup to make sure there's no mistakes.
Good luck mate.
Edit: Although having your C and E drives clean are recommended for upgraded HD's, there is no risk whatsoever of M$ scanning your files.
I've been running my box for more than 2 years now, with a bunch of homebrew and non-signed code on both, C and E, and I have never been banned (Knock on wood as ussual).