right, here goes
you can you any of the new kind of chips that support switches..alladin, executer etc (the alladin uses a switch by where if you switch the xbox on with the power button the chip is disabled and if you switch it on with the eject button the chip is on...or it could be the other way around), the executer uses a hardware switch that sits on the front of the xbox where you physically switch it off.. If the chip is on there is a green light showing and if the chip is off there will be a red light showing.
you will also need the latest bios on the chip that stops you going on xbox live, my xbox is permanantly connected to my router, so if for example i play a backup of starwars battlefront, then it will automatically try and connect me to xbox live as soon as the game boots up, if i didnt have the latest bios which stops this then my box would be knackered for xbox live because as soon as microsoft sees a modified bios online it bans the machine (well in theory it does anyway, but there are ways to get the box back online

i have tried to connect with the latest bios just to see if it works and yes it does thank god, so, if you want to go on xbox live, just disable the chip(with the switch) and when the box boots, it boots the microsoft bios as normal

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you cannot play a backup of any game via the microsoft xbox live service, you can play a backup via xbconnect or kai if the game supports system link(but most new games dont, and from my experience with xbconnect its mostly filled with halo players)..xbox live is the best way to play games, and for once in my life i dont mind paying full price for the game if it supports online play as its soooooo much fun......
anyway, im sorry if this above answer is a bit jumbled up and confusing, my brain seems to tell me one thing to type and my fingers type other things...god knows how my wife has put up with me for so long,
ps..i was going to buy fifa to play it online, the first impressions were good as i could play as forest, but it stopped there. i just couldnt bring myself to shell out £35 for a game with..hmm how can i put it...ah yes, a game with NO GAMEPLAY!!!..roll on november for pes4...the king of footy games!!!!!!!!!!!!!!