Ash, not sure what you mean by way around it? It really is a matter of 'if' MS detect you playing backups then they ban you from Xbox Live, that's it your ConsoleID is banned, no way to fix that, or get around that. Since no one really knows under what conditions MS ban you right now, it could be if you play backups, or play backups online, or have a modified firmware and playing online or even playing offline modded firmware, next time you try to connect it could ban you. Once your banned from XBLive thats it.... You can still play offline backups however.
Kelly, you can't run homebrew on XB360 yet like you can on Xbox. They've figured out a way to get linux to run, but only on a certain version of the dash, which most people have updated to a newer one and you can't downgrade to the old one since they blow and efuse when you upgrade. People are still working on it. XB360 can connect to a Media Centre PC or media player 11 and stream movies/videos from it, but only wmv videos. There are other add on programs you can download that will convert avi's etc to wmv on the fly so you can play them on the xb360, but you lose quality. Also all the decoding is done on your PC and not on the xb360. Still no where near as good as XBMC.