Microsoft has broken its silence on the recent allegations that the Xbox 360's DVD firmware has been hacked, apparently suggesting that it could provide a software update that will disable the hack. Meanwhile, the group that effected the hack continues to maintain that it will not release it to the public and that, since it is a software hack incompatible with modchips, anyone who tries to sell you an Xbox 360 modchip is a scammer.
Xboxic managed to interview a member of the hacking team, identified only as Robinsod, who explained that it is more of an intellectual exercise than a practical hack: "The hack is a modification to the DVD drive's firmware, which is stored in a flash memory chip inside the drive. If I was to release this hack, which I am most certainly not going to, I would release it as a Windows drive programming package, exactly the same as used to upgrade a PC's DVD drive. Anyone who tries to sell you a chip is a scammer and is trying to cheat you. This hack is useless to the public in its current form -- it has not been 'weaponised' and currently requires that the flash chip is removed from the drive circuit board and inserted into a special flash programming device. And I want to stress that if you don't know what you're doing you can easily destroy your 360 - don't do it."

In a brief statement, Microsoft responded to the hack: "The core security system has not been broken. However, it is reported that the authentication protocol between the optical disc drive and the console may be attacked, which if accurate could allow people to play illegally copied games. Our security team is aware of this and we are investigating potential solutions to this issue. The Xbox 360 platform was designed to be updated, and we are prepared to respond appropriately should any unauthorized activity be identified." In other words, it's a problem that could potentially be got around using a firmware update.
That very subject is discussed at length in the Robinsod interview, in language so techy that we wouldn't want to fry your brain with it. And while it sounds like a pretty clunky and impractical hack as yet, it does show the hacker community is very much on the Xbox 360's case. Although we can guarantee that anything currently being touted as an Xbox 360 modchip won't work - so avoid such objects like the plague.