Ok so im using my xbox as a dvd player but the tv i'm using is quite old, and instead of forking out for an RF modulator, i'm using an old vcr to modulate the signal into something the tv can receive.
Anyway this activates the macrovision protection on the DVD player and it makes things all dodgy like the brightness goes up and down all the time and it flickers.

Anyway, would a mod-chip cure this or is there any way around this?

Yeah a modchip would solve this, this was one of the first things to be sorted by hacked bioses a couple of years ago. Any new bios should eliminate this. Even a softmod with a bios loader will eleiminate this, or a tsop flash, have a read around and see what you want to do. I prefer a tsop flash or modchip myself