I recently read at xbox-scene has found away to play backups (that are on discs) of games on unmodifed xboxes. yup thats right. It was stated that there is a way to make the dvd immitate a original game. homebrew games and homebrew apps still willnot work on unmodified xboxes,and it is also reported that the firmware is similar to the xbox 360 discs. So i have a feeling that There will b a way to play your Backups on XBOX LIVE soon. the program HAS NOT been released but im sure this is something interesting to look out for.
What this is is a patched firmware for the dvd-rom drive. The dvd in the drive doesn't imitate anything, the drive is patched, so the copy protection is basically nullified. The code still needs to be signed, so homebrew stuff is not playable. Even if this is released you'll still need to open the xbox, remove the drive, install it in a pc, patch the firmware, re-install the drive, and reassemble the xbox. Using Ndure is easier and won't void your warranty. It's still a great hack though. Very slick piece of work.
