In order to deactivate the xK3y and beeing able to normally use the disc drive, you need the passthru mode. You activate it by turning on your console via the eject button.
The passthru mode deactivates the xK3y to allow the use of original Xbox 360 discs. That means that you can use your previously backupped discs and start them with your drive again.
So a safe usage of Xbox Live is given, thanks to the passthru mode, since the timing of the drive is more accurate due to the hardware / software combination in comparison to a software-only-solution like a hacked drive firmware. That means, even in emulation mode you should be safer than with a hacked DVD-Rom firmware, which in the end doesn't matterat all, since nobody can guarantee you to be 100% secure on XBOX Live.
At least not with a cash-bach-guarantee.
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x360 key