A couple of websites decided to check which kind of protections Microsoft's new Xbox 360 console features:
The flash is encrypted with a per-box key
The key is stored inside the CPU
The boot ROM is stored inside the CPU
Also inside the CPU is a hypervisor that verifies the running state of the kernel, making sure there is no modification (RAM checksums), else the Xbox 360 panics and blows up!
The CPU contains RAM inside of it to store the checksums
All interrupt/exception handling is done by the hypervisor
All code runs in kernel mode
The emulator for first generation games can be updated via an official Microsoft download burned to CD by the user, though the CDs’ content will be encrypted and signed with public key cryptography. The boot ROM is stored inside the CPU.
Looks like Microsoft did their homework this time. Read on over here.