I have a similar problem. I've modded 3 xboxes before this one, but they were all v1.5 or less. I have always used the Xecuter 2.6 Lite chip. The other three times everything went smoothly and I was able to flash using a X2 Lite BIOS 4981.06 cd (I made a while ago, so i dont remember much more about it).
Well, when I tried to flash this latest xbox it flashed, shuts down, and restarts 3 times before hanging and flashing green and red. This version is a 1.6....should I also try flashing the second bank or could there be another solution? I dont want to flash the second bank and have the same thing happen again.