Like any other motherboard the Xbox 360 motherboard has various types of sensors. From checking the temperature of the core to analyse the data going through certain chips.
If weird data goes to certain chips or weird measurements comes from their sensors, Xbox Live investigators might think you are using Xbox Live in contradiction to the End Users License Agreement. (EULA). Next thing they do is ban the account that was running while the strange data was passing or ban the entire xbox 360 from ever coming on xbox live again.
You can never be sure if your modifications are invisible for Xbox Live.
A service like Xbox Live deserves honest players. People using illegal copied data may also have modified that data (your Master Chief has 1000 health points while all others have 500 for instance) for their own benefit. No fair, so bye bye.