I personally don't think M$ can detect LT+ or the xkey because if they could they would of done something about
it already it's been over 2 years since LT+ and the xkey came out.
What they can do however is look for discrepancies between the actual genuine game disc and the backup one we
use to go on-line with, like if all the security sectors crc's are good the game partition is good and the
topology data is ok.
What M$ Probably look out for is if someone modifies or tampers with the ISO in some way before they burned or
used it with the xkey because then the security sectors crc's and game partition especially will be all screwed
up, when something like this happens the disc's info is checked against the genuine one on the M$ servers and
if the server detects there is a discrepancy flags you for a possibly ban, M$ probably works on something like a
3 strikes and you're out sort of thing because they have to be 100% sure you are using a illegal backup, that's
why we use abgx360 to verify the ISO's before we burn them or use them with the xkey.
But what about topology data, what happens if someone with a legit disc goes on-line and their laser is failing
and the 360 can't read the topology on the discs very well, there has to be some sort of "system device error"
forgiveness in M$'s legitimate requirement for end-user banning policy otherwise it useless, they have to be
100% sure you are using a illegal backup because if they start banning people for the slightest error the Paper
Headline will read "Class action lawsuits filed against M$ for unlawful ban hammer."
As for M$ flashing the drives, yes they can do that and they have done so before but if your M$ you have to ask
yourself is it worth it because all they will do is re-flash them back to LT+ again, plus the last time we did
it a lot of 360 failed to flash and we had to spent lots of cash repairing them.
It's always a risk flashing any drives firmware whether that's a 360's drive or a PC's DVD drive.
It all boils down to risk and reward, M$ probably said it just isn't worth flashing the drives again, we have a
way of monitoring for discrepancies and banning them who we find to be using illegal backups.