according To Adrian Kingsley hughes at zdnet.com:
If my email inbox is anything to go by, Microsoft has once again gone on a Christmas Xbox Live banning spree, and once again innocent users are caught up in the crossfire.
Here's the deal - if you mod your Xbox then Microsoft reserves the right to ban your Xbox from ever connecting to the Xbox Live online service. This isn't the first time that Microsoft has taken this action, and Microsoft is well within its rights to do this (if you have any doubts, read the terms and conditions). Problem is, each time Microsoft takes this action, I hear from people who have been banned who claim that they have been banned despite running unmodded consoles. And each time the story is the same - there's no one customers can turn to for help.
This time is no different.
Now, I have no way to independently verify that the users who have approached me are actually running unmodded consoles, but given that I know that Microsoft's track record in identifying non-genuine Windows operating systems isn't 100% accurate, I'm going to assume that the same is true for identifying modded Xbox consoles. The problem isn't so much that Microsoft might be mis-identifying unmodded consoles are modded ones, it's the fact that there's no one that users can turn to for help to discuss the problem. Several emails that I've received over the past few days make mention of tech support not being able to help "due to the nature of the ban" and that Microsoft is unable to take the consoles back under warranty to check whether they have been modded or not. If fact, customers being told that the only way to escape the ban is to buy a new console.
I'm not going to suggest that Microsoft should stop banning consoles that it suspects are modded. I'm also not going to push for 100% accuracy in detecting modded consoles (after all, I'm a realist) but I am going to forcibly suggest that they company put in place a system by which people who claim that their consoles are not modified can somehow prove their innocence. "Just buy a new console" isn't a good enough answer.