Microsoft have long stated that they have the right to snoop your Xbox and make sure it's not
modded, and ban you from Xbox Live if it is. Well, it seems the
release of Halo 2 has prompted Microsoft to actually do this. The day before the biggest title in the short history of
the console launched, those with modded Xbox's discovered they were banned from the service. And if Microsoft stick to
their guns, this is a lifetime ban. Ouch!
Engadget
TUAW