Hey,
The thing is it doesn't make sense to ban the console for a HDD 'mod'. Fair enough ban the HDD, but not the console. If you mod the console though (DVD drive) fair enough ban the console. I mean, your mate could come round your house with a modded HDD, stick it on your box and you're banned. It would be silly. But it's not like your mate will come round your house, open up your console and start connecting the DVD drive to your PC

Hence why it's reasonable for M$ to assume that the console owner modded his console on purpose, etc.
IMO, M$ will not in 1 million years ban anyone for this. They might be upset that they don't get the ridiculous mark-up on their HDDs anymore. But at the end of the day, they were beaten fair and square by the computer hobbyist. Also I don't count the usage of the bit of copyrighted code as theft (like a 'backup' IS). I thought I heard that it wasn't allowed to stop interoperability between hardware using copyright laws.
Anyway, I hope many people can upgrade their drive this way. Eventually M$ will start to charge fair prices for the HDD and crappy plastic proprietary housing. Mod on
