im almost positive its the drive. ive got a thompson vintage 1.0 xboxen, and presently its dead for all intents and purposes. the problem with those drives was something to do with the register and refracting mirror, and a lense that was too protective for its own good. basically the laser light is too low to be very consistent with reading multiple layer media, such as a halo 2 dvd and some (read: most) of the newer games. however youll see little to no trouble using earlier xbox games and obviously single layer cd's, etc.
now i havent heard anything personally about getting banned for replacing your cdrom by hand, as that isnt modifying the xbox bios or os. i have heard that certain model mod chips dont work and at least one does, without getting you banned (xecuter).
cheapest source for xbox dvd drives is ebay more than likely, and if youre technically inclined, you could look up the instructions for replacing the laser assembly for your current thompson drive here
http://llamma.com/xbox/Repairs/thoms...stallation.htm
hope this helps
**now why don't I just do that
**