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From the post:
Keeping Xbox LIVE Fair
One of the great things about LIVE and the unified community is that we work hard to create a level playing field for all gamers and have a no tolerance policy towards inappropriate behavior like hacking or cheating. As part of our commitment to our members, we do not allow people that we have detected to have modified their console to connect to LIVE. This is an important part of our efforts to try and maintain a fair gaming environment for the large majority of gamers that play by the rules. This topic is more important than ever given the recent release of the Halo 3 beta. As a result, some consumers that try to login to LIVE who we detect have illegally modified their console will get an error code (Status Code: Z: 8015 - 190D) when trying to connect to the service. These users will not have their account automatically banned from LIVE, but they will no longer be able to access the service from the console they modified.
We have stated in the past that customers can only enjoy access to the Xbox LIVE community through the use of a genuine, unmodified, Xbox console and we will continue to enforce this rule to ensure the integrity of our service, the protection of our partners and the benefits of our users.