It sounds like your hard drive died. That would explain the whole situation. Also, if you want to update to the newest xbox live... simply unplug your ethernet cable incase it starts working
. Boot modded and then in file manager in avalaunch or whatever boot up dashupdate.xbe off of one of your live discs. This will upgrade you to the newest live dash and will work with your kernel.
I know you'll argue about the hard drive dying since you swapped and the problem continued... but if your fan is not hitting anything but you heard a grinding and your dash won't load... it's your hard drive doing the grinding.