medion for this news posted in Back Page News on our forums...
The hack is a modified firmware of the Xbox 360
Hitachi-LG GDR-3120L DVD-ROM drive (the security in the Toshiba/Samsung
TS-H943 is said to be similar, so it's probably also possible with this
drive ... but it does require it's own hacked firmware of course). As
you (should) know, all Xbox 360 executables (XEX files) are signed by
Microsoft (with a private key only MS has). This means that if you try
to change anything to the XEX file, the signature will be wrong and the
file will not boot.
Now ... to protect from booting an exact copy of
a game from a DVD-R or other recordable media, microsoft gave each XEX
file a 'mediaflag'. This mediaflag tells the Xbox 360 from which media
(cd-r, dvd-r, dvd+r, dvd-rw, hdd, dvdxbox, dvdxbox360, ...) the XEX is
allowed to boot. Changing this mediaflag in the XEX header is not an
option as it'll break the signature of the file (see above), so ...
what's done in this firmware hack is 'break' the detection of the disc.
games usually get a mediaflag where they only allow 'dvdxbox360' (Xbox
360 discs - different than a normal DVD because it has some specific
bad sectors and special info in lead-in/out that can't be written with
a standard dvd burner). The modified firmware will trick the DVD drive
into reporting a DVD-R (or other) as a DVDXBOX360 to the Xbox 360.
Video: XBOX 360 Hacked
News source: XBOX Scene