Disclaimer: Messing with your modchip bios can turn your xbox into a doorstop, the steps described below worked for me, if however they turn you xbox into anything other than a functional piece of electronic equipment then that is solely your problem and will probably stem from a lack of proper research on your behalf.
This may or not solve your error 16, but it should solve it in the case where you have a non functional dash. At least it did for me.
First of all thanks to vona_a and bi876 for pointing me in the right direction for the bios upgrade, brahm2 for his pinned general hardware post (link at end) and to everyone else both here and on IRC who offered ideas and suggestion, and finally to the coders of the Xecutor 4979 bios for removinf that damned time check.
Secondly this FAQ assumes you are using a series 2 Xecuter modchip.
Error 16 is caused by an inability to load the dashboard filesfrom the HDD, it also refuses to load from a dash boot CD. Usually this is caused by an incorrect date setting (My date was set to 8975). When the bios detects an absurd date/time it skips the normal boot procedure of DVD then HDD and jumps straight to the dash on the HDD which is usually messed up / not there at all, and you get the error 16 message.
In order to fix this you need a number of things.
1. Xecutor 4979 bios - This skips the clock check and lets you boot from a CD
2. XBTool - To check the MD5 of the bios / resize the bios
3. Evolution-X or dashboard of choice - to boot from
4. Craxtion / Xiso or other program for creating an xbos ISO image
5. Nero or other burning software to burnt he image to CD
6. External method of flashing your chip.
There are a couple of possible scenarios here and I will try to list them all, I will not go into great detail hiwever as all the detailed information and links you need are elsewhere in this FAQ forum.
1. You have an external method of flashing your chip. Simply prepare the bios, flash the chip, boot off of the boot cd, ftp into the xbox and repair/replace the dashboard files.
2. You have a friends modded xbox and they have enough confidence in your abilities to let you play around with it.
A. (This was the way I went) You have a modchip (Xecuter 2.0 lite) Which will not boot your friends xbox (1.3) - Prepare the boot CD with the required setup to flash your friends modchip with the 4979 bios. Make damned sure you know what you are doing here as if you mess it up you may have just messed up your friends xbox. Assuming this first flash went ok, remove the chip from your friends xbox, insert it into your own and boot to the same CD. FTP into the xbox and repair/replace the dashboard files. Sometimes if you cannot get the dash to work, but you have a backup at another location it may get a little more complicated. (it did for me) In this case you need to be able to boot at another location but your friend will obviously not let you keep his modchip indefinitely. In this case after booting your PC with your friends modchip, you hotswap the chip with your own and flash your chip. Your chip will not boot your xbox from a CD.
B. Your modchip can boot your friends xbox. Insert your chip into friends PC, boot to CD, flash modchip. Insert modchip back into your xbox, boot to CD and FTP into the xbox to repair/replace the dashboard files.
Hope this helps somebody.