So I've gotten some responses from Zorlon over at EP, but still awaiting some data from headphone over at EMU.
Based on what I have gathered so far I am beginning to thing that this may be a softmod limit/issue.
Now honestly I don't know anything about softmods or really much beyond my hard-mod X3 as it is the only OG XBox I have owned.
My understanding is that there are three ways to mod your xbox:
1) Pure soft mod - I think this is done using a save game exploit and then installing an alternate dashboard, but you continue to use the MS BIOS and a locked drive. I believe you can add a larger drive to your system as long as it is lockable.
2) TSOP - This involves flashing the original MS BIOS with an alternate/hacked BIOS. Involves some soldering (or at least connecting some wire points inside). You need to be softmodded prior to TSOP but afterwards you can launch from a hacked BIOS and put in any drive (doesn't need to be locked - depending on the BIOS you load)
3) Mod-chip - Solder a separate chip onto the board which has the ability to boot up to one or more BIOSes (including the original). Doesn't require any soft-mod before and capabilities are based on chip/BIOS, but are generally the most flexible.
I may have some slight errors in the above - but that I believe is a mostly accurate representation of the methods.
Therefore, it is entirely possible that the MS BIOS that continues to be loaded has these file limitations that isn't visible on a TSOP/hard-mod setup where an alternate BIOS is loaded.
If the alternate BIOSes do get around this, I find it a bit strange that there aren't any other symptoms/problems that occur when a system basically designed to support 240 files/folder suddenly can support more. One would think that this "side-effect" of an alternate BIOS was much more widely known and discussed...especially considering it is about 15 years down the line
I'm still skeptical of this since as I noted on my thread over at EP there are some games which clearly have many many more files than 240 in their directories and these games appear to run fine from HDD (note when I say fine here I mean that I have never seen a post discussing people having issues with these titles - Silent Hill 2 is one example that I found after a quick search).
But, this is my best working theory and have confirmed Zorlon uses/used a softmod. If headphone can confirm this then I think that would give a high level of probability.
I'm considering doing a softmod to my box and booting up with my X3 disabled to test this theory as well.
Rocky - it looks like you maintain a softmod method. I think I can use this relatively easy on my hard-modded box to also soft mod? If you can give me any detail on how to do this (and what it modifies) and how to easily clean it up afterwards I would be happy to try this and maybe end the mystery for all.
p.s. - Oh one other thing I was curious about. I'm pretty sure Rocky that you have mentioned the 240 limit in other threads in the past as if you yourself have experienced it (not necessarily in save-game issues, but just in general file limitations). I also thought that I have seen you discuss alternate BIOSes that you run - so my guess is that you run a TSOP or soft-mod. Ofc you may have more than one system or a combination of them over the years. I'm curious if you can recall that you have ever experienced a limit of 240 files on a system and if you recall if it was a soft-mod or not. Because if you can claim to have seen a 240 file limit on a TSOP system that kind of blows my theory out of the water