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Originally Posted by kronas
although it is illegal 
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I don't think the mod chips themselves are illegal. The XBox is yours to do with as you wish.
But, most of the "mod BIOSes" which you flash onto the mod chips are technically illegal, as they contain copyrighted Microsoft code taken from the genuine XBox BIOS.
And, of course, "backing up" games is illegal.
There are, however, legitimate reasons for modding an XBox, in my opinion: playing imported games & DVDs.
There was a thread on this a few months ago:
http://www.cableforum.co.uk/board/showthread.php?t=9361