On my original xbox, I had the simple four sequence password set up to make it hard to accidentally sign into xbox live.
I still have this on my 360, but only so that when I have people over, they don't accidentally sign into my account, and do stuff online (be weird, get me banned, who knows).
After the NXE update, when I sign into my profile, I am now prompted twice for my sequence.
I have been trying to search for anybody else talking about it, but didn't have any luck, so if this has already been discussed, I apologize.