Microsoft Banning Modded Xboxen

An anonymous reader writes "Since the release of Halo 2 (ed: and just before), Microsoft has been banning modified Xboxes from Xbox Live. Some have even been banned with their mod-chips turned off. Previously many users had been able to use Xbox Live provided they disabled their mod-chip. There are a few theories floating around as to how MS is doing this: from scanning the hard-drive for non-MS material to being able to check if the DVD-drive/Hard-disk serial number is from stock or not."