A flaw in the Xbox 360 DVD firmware could allow the forces of darkness in the hacking world to install custom firmware in the machine. According to Xboxic, here, the hack has been found by a bloke who goes by the handle 'TheSpecialist' and has found a few firmware hacks before. Mr TheSpecialist said that the hack enables a person to gain full control of what the DVD will accept and would mean that the drive could gain the capability to boot backups of original game DVDs.

Not signing the firmware is indeed a major mistake, as it allows the hacker to gain full control of the drive. Microsoft can issue a forced update via Live to disable the modification, but a new firmware could be installed again which goes undetected. As such the hacker is in control of the cat/mouse game.

An important detail however is that the system will not run any unsigned code itself. As such it is impossible to flash the firmware by software, and you will need to have a hardware programmer to reprogram the firmware. Obviously this disqualifies the hack for any general usage. Thankfully, even if it would be usable to pirate games, hacker ethics and fear of Microsoft's legal department stops the guys from actually distributing their findings. However, considering the fact that modding consoles has become an industry on its own, people with less noble intentions may intend to capitalize on the hackers' findings now that it is out in the open where Microsoft slacked on security.