Microsoft finally brought down the hammer on modded Xbox 360s. With the release of the Halo 3 beta and as part of Microsoft's efforts to make Xbox Live a fair, fun, and unified community they are actively banning any Xbox Live connection from a 360 that has been hacked or modded. So, as such, the Live account isn't actually banned, just any connection to Xbox Live from the console is banned. As a result, some people may be finding that they can't connect to Xbox Live and get an error message similar to the one above.
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