Alright, when I first installed my X2 lite with header pins in my 1.0 box, it booted three times and fragged, then i opened it up, took it all apart, put it back in, and it worked. So it worked for about a week and then I decided that I wanted to put switches in the back. So I installed the switches tonight, put it all back together, and then there it went again flashing red and green at me. Well I knew it had worked before, so I knew it wasn't my soldering or the chip or the bios, so I thought I'd play around with the box and figure out for good what was causing this. I disconnected cables and it didn't make any difference. It happened when the chip was switched on and when it was switched off. I then found the problem. I pushed the power and it started to go through the same process again. Only this time, after it rebooted once, I pushed down a little bit on my x2 lite. Suddenly, on the second reboot, the dvd drive kicked in and the xbox worked. Of course, I still ended up getting an error because my hard drive was disconnected. But I turned it off, jiggled the x2 a little, and tried it again. It fragged. Then I adjusted the chip a tiny bit, and it worked again.
So... apparently, the x2 can easily come out of contact with the header pins. The pins are definitely making good contact with the lpc points, I tested. It seems like most (if not all) of the people having this problem installed with header pins, so whenever anyone else has this problem... I'd say before you try anything else, take out your hard drive and dvd drive and plug the xbox in. Push the power button and try moving the x2 around a little and see if it works. Hope this helps someone!