Quote from Microsoft on Console Modders

Their policy:

One of the great things on the LIVE and only community is that we are working hard to ensure a level playing field for all players and have no tolerance policy towards inappropriate behavior like hacking or cheating. As part of our commitment to our members, we are not allowing people we have found that mod their console to connect to live. This is an important part of our efforts to try to create an environment for fair play the vast majority of players who play by the rules. This issue is more important than ever given the recent release of the beta of Halo 3rd As a result, some consumers who try to connect to LIVE that illegally modified their console, will receive an error code (Status Code: Z: 8015 - 190D) tries to connect to the service. These users are not automatically banned from live, but they are no longer able to access the service at the console.

We have in the past said that customers can only benefit for access to Xbox Live community through a genuine, without amendments, the Xbox console and we will this rule to the integrity of our services, the protection of our partners and the Benefits of our users.