THink about it like this; you bought it, it's yours. Just lik a car, if you put a new stereo in it, then sell it...it's ok. BTW, modding an Xbox, is nice to have.
yes, but its not like putting a stereo in though. one of the most common mods is to put mod chips in. and recently they've been made illegal in UK, not to sure about US though. and along with mod chips are hard drives. and the main reason to put a 160GB hdd in an xbox is to copy games to it and play them through a custom dashboard. which is illegal.
i guess the main question is, what are the exact mods you intend doing?
Not illegal here in the US...or so I hope. It's only used to be able to play system linked games, such as Doom 3, where you can only play multiplayer through system link! (kinda sux). AS for soft mods, all should be well.