I went to update my XBOX as prompted on May 24th and received an error code. I called XBOX to troubleshoot and solve the problem. After an hour on the phone with an employee not quite up to the task of figuring out this problem or communicating well, I was informed that the update would never work and I would never be able to use XBOX live again because, according to them, my XBOX was modified. My XBOX, however, has never been modified in any way and they refused to explain why they claimed it was modified. To be "fair" I should mention that they did offer a "solution" which entailed buying a new XBOX 360...right.
The first person I spoke with, who fields incoming calls and directs them to the appropriate person told me initially that she has received many calls with the error code that I was reporting. XBOX's solution to this problem appears to be to blame consumers instead of taking responsibility and fixing the problem with their updates. A little investigating on what "modifying" means on the internet revealed that any update I ever installed on my XBOX would have identified a modification and forfeited my account. Needless to say, I have updated countless times and never had any problems whatsoever (because my XBOX is not modified). A little more searching on the internet revealed more people complaining of the same problem.
If anyone is on the fence about buying an xbox, I highly suggest you consider the PS3. I had to buy multiple units of the original xbox (because they broke) and this is my second 360 (I purchased a warranty from the store I bought it from and so received another after getting a red ring of death). XBOX (microsoft) clearly does not care that they sell faulty units or screw over their customers. Perhaps if people stop buying their products they will be forced. I, for one, will not continue to pay anything for any products XBOX puts out.