I cannot walk you through modding an xbox but i can tell you this. Microsoft is trying to disallow all the people with modded xboxes to use the xbox live service. This is what I heard and it sounded legit from gamespot.com.
yah my friend has kind of found a way arounf that. he keeps changed the ip address but the is what i'd like to call an "underground x-box live for midded x-boxs. If ya wanna know what its called im me so i can double check with my friend to see if i have the right site.
From the information that I have read on various other forums is that if you are going to install a new harddrive in an Xbox do it before you join Live. The harddrive key is one of the items that is checked by Live. Also almost all 3rd generation and 4th generation mod chips can be turned off.