I think I found it. I downloaded a virgin 5035 .ini file and modified a few parameters at a time until I got the pink logo. I then backed out the changes and sure enough the logo was fine. BTW, Im not using a custom logo, this refers to the x2 logo embedded in the bios.
It looks like the problem is with msLogoTransColor which when set to "00" appears to mess up the logo. Granted this may work with other color configurations but it does not work my color scheme (blue flubber/logo w/ red machinery/highlights). Just in case the color scheme plays a part in this, Ill post my entire .ini file. Note, there are two entries for msLogoTransColor (one is commened out). Depending on which entry is commented out, you should be able to switch between the messed up logo and the normal logo.
; startup xbox debug monitor (needs sdk installed)
startDebug = 0
; enable igr
igrEnabled = 1
; display flubber anim
doStartupAnimation = 1
; do dvd drive check
doDvdDriveCheck = 0
; do not reset when pressing on eject
noResetOnEject = 1
; 255 characters max here, format is <drive>:<path_to_xbe>.xbe, e.g. "f:dashes\avalaunch.xbe"
; keep all paths lowercase just in case you have any issues with dashboards booting
dash1Name = f:xbmc\default.xbe
dash2Name = f:evox\default.xbe
dash3Name = f:default.xbe
dash4Name = e:default.xbe
dash5Name = c:xboxdash.xbe
; the xbe name of the title image loaded from dvd on startup, 16 chars max!
dvdBootXbeName = default.xbe
; logo colors
colorXlip = ff3333ff
colorXlipHighlights = ff003366
colorInnerWalls = ff0033ff
colorInnerGlow = ff990066
colorXboxText = ff0000cc
; patch away xbox live connectivity code
patchXboxLive = 1
; if 1 then system runs on error if clock is invalid
clockErrorCheck = 0
; flubber (blob) colors
colorBlob = ff000099
colorBlobGlow = 000066cc
colorGreenFog = 000099ff
colorFogGlowStart = ff6699ff
colorFogGlowEnd = 00003399
; 3 scene colors
; ambient
colorFlubberScene1 = ffcc0033
; diffuse
colorFlubberScene2 = ffcc3333
; specular
colorFlubberScene3 = ff993333
; do random flubber
randomFlubber = 0
; flubber animation number, 0 - 14
flubberAnimationNumber = 2
; speed of xbox fan, value 10 equals 20%, value 50 equals 100%
fanSpeed = 10
; display flubber blob in wireframe mode
flubberWireFrame = 0
; display the TM logo
displayTmLogo = 0
; define the xbox logo background color
; ff000000 is pure black (ff is full alpha 000000 is rgb)
xLogoBackgroundColor = ff000000
; enable VGA patch (currently not working - do not use !!)
; enableVgaPatch = 0
; stop bios to boot DVDs
disableCdromBoot = 0
; xbox LED color, 0 = off, 15 = green, 240 = red, 255 = orange, 83 = cycle
ledColor = 15
; blob radius * 10
blobRadius = 23
; do blob 'pulse'
blobPulse = 1
; do fast animation
fastAni = 1
; apply interlace filter on startup
iFilter = 0
; enable transparency on mslogo
msLogoTransEn = 1
; ms logo transparency color
; msLogoTransColor = 00ff00f6
msLogoTransColor = 00
; no flubber machinery
noFlubBg = 0
; no startup sound
noSound = 1
; show ms logo
showMsEn = 1
; show x logo
showXEn = 1
; do spikey blob
spikeyBlob = 1
; slow motion blob (ugly)
slowMoBlob = 0
; release all debug monitor memory after launching xbe
useAllMemory = 0
; no x logo light
noLightEn = 0
; color of x logo light
xLightColor = ffcc3333