I too am totally new at this but experienced the same problem you are. After researching many forums, trying different things I finally mastered it.
If you use the latest executer2 bios (4981) you will see "executer2" instead of "MS" when you boot up. If the chip isn't working the Xbox will still work like it always has. So unless you use a bios like I mentioned or change the color of the logo as mentioned earlier, you won't know.
It took me a while to figure out mine wasn't working. Turns out it wasn't seated in the "D0" hole. The instructions were vague on that part so I didn't know exactly where it was supposed to sit. I just took a hard look at where I thought it should go, then used a sewing needle to carefully scrape it off. Don't know if that was necessary, but the first time after seating it after that it worked right away.
I think even if you don't have a decent bios loaded or the proper bank selected with the dip switches you will still know it's seated correctly becaue the xbox light will flash red/green.
Hope this helped.
bp@rr