No, you're not understanding the problem. Your new Xbox is one click away from the same fate as your old one, because you've used SID. The fact that it is working now means nothing - your old Xbox used to work as well.
SID allows you to install softmods that have no shadow C protection. Shadow C hides the softmod files, so games can't overwrite them. No shadow C = games can wreck your softmod, as you found out with your old Xbox.
Krayzie 1.1.1 fixes that, and HeXEn will upgrade your Xbox to Krayzie 1.1.1 with no fuss - but ultimately it's your choice. If you're happy to live with an unprotected softmod then leave it as it is.
Edit: And you can't sell the old one as a normal console with error 21........
This post has been edited by Heimdall: Apr 26 2012, 05:06 PM