what is the best setting for the matrix ?
to play my backups and original

i leave mine in mode 3 so i can easily go to the retail bios, but i believe the majority of people leave them in mode 2.

i personally put mine in mode 4.
check out this thread, it is pretty much the same thing u are asking
and a lot of people have voted

Matrix Modes

I have an external switch so I can change it anytime.

Ya I added an external switch as well. It makes everything so much easier, since you don't have to open everything up again to flash, or switch to mode 3.

I also took it a step further, and added a small LED in the front of the xbox, which illuminates when the chip is in mode 1 (disabled). It indicates that it is now safe to use xbox live. This way its easier for roommates to understand, and prevent your box from being banned.