he's booting from the first bank (1-4) switch settings on-on-off-off (Flashbios v3.0.1)
you need to boot from the second bank (5-8) switch settings off-on-off-off (Flashbios v 3.0.3)
try it again
also, when you boot to the backup by pressing power and eject at the same time, your switch settings do not matter, your xbox will boot to the designated 256k backup bios. In your case, the backupbios installed on your chip when it was shipped to you is version 3.0.1 which will not work on v1.6 or 1.6b xboxs. you need to use Flashbios version 3.0.3 which is only on the second 1mb bank (off-on-off-off). This is what i suggested in my previous post and it doesn't seem like you tried it. read more closely and take a look at that link to the switch setting explaination.
I also suggest that once you DO get it working and you have a hacked bios installed and you can access you xbox via ftp, THEN you replace the backup bios on your modchip with flashbios version 3.0.3 by ftping to your xbox and accessing the "backup" folder in the "admin" directory.
VERY IMPORTANT: because you have a version 1.6 box the current backup bios will NOT work for you because its version 3.0.1. thus it is very important that you do not accidentally write over the flashbios v 3.0.3 located on the second 1mb bank or you will be royally screwed. make sure before you attempt to flash a bios, you change the switch settings to on-on-off-off to flash to the first 1mb bank.
Again...good luck