Entirely by software. First of all build a newly hacked NAND with JRunner, 360 Multi Builder or any other NAND building program. Then flash it back with XeLL or homebrew like 360 NAND flasher (launched with FSD) After that, download the update from xbox.com and unzip it. Rename the $systemupdate folder to $$ystemupdate (THIS IS VERY IMPORTANT) and plonk it on the root of a FAT32 USB. Plug it in and boot the MS dash. Let it update and you should have Avatars etc restored ;] ALWAYS UPDATE THE NAND FIRST before you update the Dash. If you don't then in the worst case you'll fuck up your entire xbox. First the NAND and then the Dash, then you won't have any problems.