You got the error because the default.xex was still in the root directory of your flash drive along with the System Update. This should not cause a flag or a ban.
I will try that as a last resort, cause the last time I signed in on live before the ban I had about 19000 gamerscore now I have 33000 or so. I would hate to loose all that. I might try and find a way to uncorrupt my profile.
I have a banned console and they worked fine till the new dash update. I even made a new profile and unlocked an award and it still didn't show only the "!" symbol.
I'm in the same boat. I have a banned console so I only play offline. I would like to know if there will ever be a fix for this. Micro$oft cant just assume that everyone who has a 360 has live.
I updated to 2.0.12581.0 and can play any of my backups that I have tried on my benq 1.61, but one. I tried Fable 2 and it wont load my save. It just sits at the loading screen and will never complete the load. Seems strange that the Fable games are affected and not any others. I am going...