Ut oh. It looks like Microsoft is banning users from XBox Live when they connect with a modchip -- even if the modchip is disabled.

A brief explanation: installing a modchip in your XBox turns off Microsoft's copy protections. This lets you do all kinds of neat stuff, from making, uh, "backups" of retail games to emulating your old NES favorites to playing downloaded movies on your TV. It's a handy thing to have.

As you might expect, the "backup" thing -- more commonly referred to as "piracy" -- doesn't sit well with Microsoft. MS takes a loss of between $25 and $100 on each XBox sold, so they're also not nuts about people buying XBoxes for legal purposes that don't involve buying MS games. Consequently, it's always been the case when you connect to their online gaming service (XBox Live) that active modchips will be detected and modded systems banned. Each XBox has a chip inside -- called an EEPROM -- that contains a unique identifier. This is what gets banned. Once you've been banned the only fix is to somehow get your hands on a new EEPROM and install it. It's a pain.

The modchip people solved this simply enough by putting external power switches on their chips, allowing them to be easily disabled prior to going onto XBox Live. This worked fine. You had to own a legal copy of your games in order to play them on XBox Live, but with the flip of a switch you could still fire up Super Mario 3. Fair enough. The nerds were soothed, and the world spared their terrible fury (e.g. irate newsgroup posts).

But the order has been disturbed! Microsoft can force users to download new XBox Live software whenever they'd like, and the latest round of updates seem to have included some new anti-modchip features. People are getting banned with their chips off, and no one's sure why -- there's a lot of confusion. The mod community has put together a survey that should help identify the real algorithm being used to ban, but results aren't yet publicly available. So for now we're stuck with a lot of wild speculation. The most popular theories:

scanning hard drives for game backups

Folks with backups aren't getting banned consistently, so the verdict seems to be that this isn't the problem.

detecting non-stock hard drive models

The XBox hard drive is only 8 gigs, so nearly everyone installs a bigger one as soon as they mod their XBox. But again, this isn't happening consistently, and there are some technical reasons to think that this may not be possible for MS to do in a rigorous way.

scanning the LPC bus for modchips

Some users are reporting that their modchip status light is changing colors briefly prior to getting banned -- this would certainly imply that MS has installed a program that pokes around the system for hardware that shouldn't be present. Modchips have become ridiculously over-engineered, so it's not inconceivable that some would have a detectable presence even when they're nominally "off". If this really is happening, it likely only applies to some modchips -- perhaps only the newer models. It's too early to say.

the "marriage" theory

This is the favored explanation at the moment -- the thinking is that when you first log into XBox Live the service records your EEPROM ID and pairs it with your hard drive's serial number. If you connect to XBL in the future and have a new hard drive, MS knows you've cracked open your XBox, voided your warranty, and most likely hate America. Bad consumer! If your XBox was already modded the first time you got onto XBox Live, you're probably okay.

So that's where things stand. For my part, I've been playing Halo 2 online all weekend with Charles, Scott, Kriston and Yglesias -- so far, without any problems. I've got an older modchip (Xecuter 2.3b lite) and only signed onto XBox Live after the modchip. Maybe I'm safe, or maybe I've just been lucky. I'll keep you posted.

(Miles apart, I can still tell that Catherine is rolling her eyes.)