Microsoft's so-called system that contains "levels of security hackers have never seen before", ended up being just that - hackers were very suprised how easy it was to create a working backup on DVDR of Xbox 360 software titles. The hackers stated that they were *amazed* at the incompetence of the years of development and many millions of dollars Microsoft spent on the security of the box, going as far as producing all the silicon themselves so as to implement the protection scheme and encryption keys throughout the entire hardware system. But, the Xbox 360 designers made a fatal flaw, in that of the firmware of the DVD-ROMs used (by both Toshiba-Samsung & Hitachi-LG) was *not* digitally signed (like the rest of the system software, which is encrypted with a 1024-bit sipher strength) and even contained the debug data, so as anybody with enough assembler code knowledge can relitively easily modify the firmware so that it tells the optical drive that the DVDR in the 360 is an original DVDXbox360 or DVDXbox, and not identified as a copy.
To do so, basically, one must disassemble the unit, and read the flash EEPROM by hardware means (no software homebrew flasher methods are working as yet, at least publically known methods), modify the firmware, then re-solder back into the drive the EEPROM containing the modified flags. Once completed successfully, the Xbox 360 has no problems booting DVDR game backups (of the same region only, the RCP is not hacked) as is shown in a video released by the team who claimed they did it. They are to this day, able to even utilize the Xbox Live service, until Microsoft finds the loop-hole and updates the system with a patch - even then, the hackers believe they can still boot the standard recordable backups, with minimal effort.
However, they have not released the modified firmware publically, in fear of following lawsuits from Microsoft, and also do not wish to support piracy. Proof Video
Quite remarkable, IMO!