The only reason why people would get banned is because of the AP 2.5 checks that are in the Reach Disc. It's a pretty flawed check as people that have never flashed a drive in their life are getting banned.
Game doesn't work, it says it cannot write to my gamer profile because the storage device has been removed. If the storage device has been removed, why can I play the game since it downloaded directly to my HDD, it makes no sense at all. Is anyone else experiencing profile issues? Like when they go to the dashboard, your gamer achivements, friends, messages, avatar are all gone unless you sign in and out? Maybe the issue is somehow related?