OK. Let's say my friend wants to let me have a backed up copy of Halo 2 Vista. Will i get banned for using a backed up copy of a game like what happened to the 360's?
those people were banned for having a working copy of the unreleased Halo3. Trying to use his copy of Halo2 will not get you banned for life, but you will probably not be able to play at the same time as him unless you purchase your own copy.
No. Don't you know about 360 modding? People can make backups of discs. And if microsoft detects that they are playing with a backup, they'll ban them. But yes, you can also get banned for having a working copy of Halo 3.