Let Me Break It Down
*Turns Hip Beat On*
There is nothing illegal in modifying a system.
I fail to see what the difference between modifying a video console to do more things than it was originally intended and a modified car that has a lowered suspension, or racing tires.
Basically Modifying an XBOX is not illegal (In the UK & EU I believe, not sure about US), Yes it gives u the ability to go about "Illegal" activities, such as downloading illegal content, however a modded XBOX is not illegal, you are merely voiding your warranty.
Modding your XBOX so you can download games illegally off the net
IS, If you want to Mod your XBOX with the intention of copying
your own games, then transferring your files to the XBOX's Hard Drive, with the aim of not damaging the Original CD's you own, then its fine.
However, back on topic, personally I think you should goto:
http://www.google.co.uk and search for: "XBOX Modding" and select to search "The Web" or "UK Sites", it's not that taxing is it?