The founder of Lindows, Michael Roberston, started a contest a little over a year ago to get a version of Linux up and running on the Xbox. Each phase had a reward ($100,000), and moved the contest forward to the next phase.
The first phase, finished last year, involved getting Linux running on a machine which had been hacked with hardware.
The most recent phase, just completed, involved running Linux on an Xbox without physical modification. This was apparently accomplished using a game with a flaw in its save and load code.