People familiar with the game console will know that the Microsoft has locked it up by using hardware and software security methods in an attempt to ensure that no software is run on the machine that isn't first OK'd by Microsoft. (This, by the way, is the precursor of the Palladium technology)
It appears, though, that the mechanism they are using isn't particularly effective in certain places. In the past, all of the attempts to get beyond the security have required hardware or specific games that have security holes in them. Now, however, an exploit has been found that works on any XBox (at least all of the ones that they've tested).
However, since the exploit requires an initial load of two files to the hard disk that does require either the 007 hack (a game exploit) or cracking open the box and directly accessing the hard drive, it may not be for everyone.