Halo 2 locking out modified Xboxes from Xbox Live service

News.com is reporting that Halo 2 owners with a modified Xbox are unexpectantly getting locked out of the Xbox Live service. 

Recent updates to the Xbox Live service, made just before Tuesday's release of "Halo 2" was set to touch off a huge surge in Xbox Live subscriptions, appear to go much further, however. The service now apparently checks the console's hard drive and boots any machine with storage different than the 8GB or 10GB hard drive originally supplied with the console. Hard drive upgrades are one of the most common hacks for the Xbox, allowing it to serve as a digital media jukebox.

This is covered in the EULA for the Xbox live service but it is still worrisome. I can understand the need to check for mod chips to cut down on piracy but for something as mundane as a hard drive upgrade it seems that Microsoft is going a bit far. I have read claims to the effect that end user replacement DVD drives were also affected. Imagine the ruckus that would happen if Microsoft disabled the TCP/IP stack in Windows if a cdkey did not match up or something.