I had exactly the same problem. My problem went a bit furthur though because I couldn't get any bios except the X3 ones to work.
The best and quickest way to fix the problem is with an Evox boot disk. Download Quix. Its specifically for making Xbox ISO's. Check out the link below for how to make an Evox boot disk.
http://www.xbox-scene.com/articles/qwix-iso.php
Once you've got the boot disk, load it up, ftp the eraser file to the C: drive on your xbox, use an xbox file manager to access the HD contents (BXplorer is a good one) then execute the eraser XBE file.
Viola. Problem solved.