Basically wondering why a flashed Xbox 360 cant play Full version Arcade games from DVDs?

 

Right. With the JTAG it allows you to re-sign XBLA stuff to your console/profile ID, you can't do that just by burning it to a DVD and playing it. There's a MW2 glitch that allows some demos to be unlocked, but its spotty and doesn't work for all XBLA demos. Your best bet is to just buy a JTAG-able motherboard or whole system off ebay or wherever, and stick it in your current 360 chassis. I bought 10 taggable boards off ebay for $25 with $10 shipping. I have TONS of spare cases/PSUs/AV cables from my repair shop sitting around. JTAG them, sell them, profit.