Mr. Huang, a freelance technology consultant in San Diego, tore apart his xbox to figure out ways to run his own software on the device. Looks like he's done it. Most videogame consoles, unlike personal computers, are designed only to handle games and hardware that the console makers approve. Microsoft and other console makers don't want users running pirated games or other software from companies that haven't paid a licensing fee. But since the early 1980s, enthusiasts have tinkered with the consoles to make them do more. Hackers have designed chips to plug into the machines to circumvent their security, letting them play pirated games and, more recently, browse the Internet. Despite copyright laws that prohibit hardware and software tampering, a profitable underground industry has blossomed to sell chips to defeat the security systems. With the previous version of the Xbox, hackers were able to manipulate the console to copy games and store them on its hard drive. This allowed players to rent games rather than purchase them. Hoping to protect its system against hacking, Microsoft customized the new Xbox 360's hardware, instead of using off-the-shelf components. It added layers of additional security. To hackers, that presents a challenge. So far, no one is believed to have fully cracked the Xbox 360, though some hackers in Denmark claim they have found a way to play some copied games on it. All over the world, teams of hackers are working to claim bragging rights as the first to wholly decode the machine and find the loopholes in its security system. Mr. Huang says he doesn't sell tampered chips and just wants to run self-created videogame software on the box. "It's about overcoming the challenge Microsoft has set out there," says Mr. Huang, who wears his hair in a ponytail and has a doctorate in electrical engineering from the Massachusetts Institute of Technology. "They've bragged about the security for the Xbox 360, so now it's like: Well, let's see." Microsoft isn't happy about the hackers. Protecting intellectual property is a "high priority" for the company, says spokeswoman Molly O'Donnell. The company declined to comment about the security of the XBox. Microsoft's first Xbox, released in 2001, was a favorite target of hackers. Numerous Web sites with names like Modking.com and Xbox-modchip.com sprang up to sell hacker-designed chips for it. Underground wholesalers, installers and manufacturers profit from finding ways around the original Xbox's security flaws. "I don't see the reason to get a nine-to-five job or work part-time after school," says an Xbox maven in Ontario, Canada, who buys and sells modified chips in his spare time. He describes himself as a 14-year-old student and estimates he made $50,000 selling microchips and other hacker-designed products for the original Xbox last year. He says he sells chips to Web sites and middlemen who place the chips in the Xbox. Because he doesn't provide additional software necessary to skirt copyright protections, he does not see his actions as unlawful. "I'm not doing anything wrong," he said. The Digital Millennium Copyright Act, passed in 1998, makes it a crime to circumvent anti-piracy measures built into hardware and software. Proponents and critics of the law say it is vague about the legality of consumers' tearing apart their game consoles and altering them for their own use. But several federal agencies, including the Justice Department's Computer Crime and Intellectual Property section, recently raided stores in Maryland and California that sell modified Xboxes. They have prosecuted some sellers. That hasn't discouraged the race to decode the Xbox 360. Many hacking groups, with names like Team Xecuter or Team Xodus, collaborate via the Internet, divvying up responsibilities along lines of expertise. They discuss their progress online in chat rooms. Mr. Huang, whom friends nicknamed Bunnie after the deadly rabbit in the film "Monty Python and the Holy Grail," has been tinkering with electronics since he was 10 years old. The native of Kalamazoo, Mich., was at MIT getting his doctorate in 2001 when he cracked Microsoft's original Xbox. At the behest of a professor who told him his actions might be illegal, Mr. Huang in 2002 let Microsoft know what he had done. Mr. Huang assured Microsoft he had no ill intent, and the company decided not to take legal action against him. Microsoft confirms the account. In 2002, Mr. Huang presented his tampered Xbox at a conference on computer-security technology. A year later, San Francisco-based No Starch Press published his book "Hacking the Xbox: An Introduction to Reverse Engineering," a step-by-step guide to cracking the Xbox. The book turned him into a celebrity hacker. Microsoft declined to comment on the book. When the new Xbox 360 had its debut last November, eager consumers snapped up the highly anticipated device. Mr. Huang complained in an online chat room that he couldn't find one. Three weeks later, a console appeared on his doorstep, apparently sent by a fan. Mr. Huang quickly tore open the machine, pulling out components such as memory chips to examine them more closely. He then plugged one of the chips, called a flash ROM chip, into a device called a ROM reader. Using the reader, Mr. Huang was able to observe how data traversed the system and see where the information was finally stored. Once a month, Mr. Huang also meets with other local hackers, including an 18-year-old whose goal is to play Apple Computer Inc.'s software on the Xbox 360. Over nachos at a Mexican restaurant recently, they swapped information and discussed their progress. Thus far, the group has made only small breakthroughs, such as figuring out a way to manipulate game images. Mr. Huang and his cohorts predict it will take another nine months before they can fully crack the console. So they were taken aback when a Dutch hacker dubbed "the Specialist" emailed Mr. Huang in February claiming he could play copied games on the Xbox 360 by altering the console's DVD player. Several of Mr. Huang's pals tested the method and confirmed that it works, though they don't consider it a full decoding of the machine. The Specialist couldn't be reached for comment. With other hackers appearing to make more progress, Mr. Huang admits he may not be the first to fully crack the Xbox 360. "Things are different from a few years ago," he says. "The stakes are higher for Microsoft and the hacking community has intensified its efforts."