Here's what happened, i have a 2nd hand xbox360 (unflashed) with hitachi drive that i flashed with the latest fw at the time (before the first banning occured). I played with it on live a couple of times (disks were stealth even though my fw wasnt), but when the bannings started i didnt play on live anymore but i could still connect to it. After that i didnt bother changing fw to the latest ixtreme cause i started playing only with original games.
So for the following months i played with originals on live and everything was ok, but today i try to connect and it seems i'm banned, cause i got the same Z code.
What i'm trying to say is for those who are saying that the problem is from discs, its not! I've been playing since the first bannings with original games and i've also been banned!
Hope that helped.
