The group, which has asked not to be named in this article, approached ZDNet Australia after repeated attempts to contact Microsoft independently failed.
The researchers say they want Microsoft to release a "signed" Linux boot loader--software that runs when a computer starts up to load and give control to the operating system--that would allowusers to run the open-source operating system on the console without installing a chip.
A signed Linux boot loader will not allow users to load pirated games, they say. However, the release of new Xbox exploits that the researchers claim to have developed to run Linux on the console could have the side effect of allowing piracy without the need to install a mod chip, something the hackers say they would like to avoid., must be soldered onto the console's main circuit board.
The range of exploits will be released within weeks if Microsoft doesn't respond to their requests for talks, they say.
Microsoft is investigating technical and legal issues in connection with the alleged hack and is expected to have a conclusive response early next week, the company said in a statement.
"We're...very committed to respecting others' intellectual property, and we request the same respect applied to our innovations and those of our partners," the company said in the statement. "Our primary concern (is) game-counterfeiting, which impacts our development partners who are developing games for the Xbox."
Michael Muir, of Australia's OzXChip, a legal mod-chip business, says the release of an "official" Linux boot loader would be a positive step.
"I would love to see a signed Linux boot loader, even though I would essentially be out of business," he told ZDNet Australia.
Muir says the release of the claimed series of exploits, one of which is in the Xbox Dashboard utility, factory-installed on the Xbox hard drive, could be disastrous for games companies intent on preventing piracy. If genuine, the exploits would let anyone with even a slight technical knowledge "reflash" the Xbox BIOS, allowing users to pirate games. The only hardware modification necessary is a dollop of solder on the write-enable pads on the motherboard.
It's because of the added solder that the group isn't eligible for thebeing offered to the first person to run Linux on the Xbox with no hardware modifications at all.
The technique is understood to be not new as such. Since an exploit was found in the "save game" function of "007 Agent Under Fire," it has been possible for those who were willing to make the effort and had the necessary level of technical knowledge to modify the BIOS.
However, the group believes that it's time to make it easier for users to take the steps necessary to run Linux on the console. Because the claimed chain of exploits is independent of any game, they could prove to become very popular. Users could download them from the Internet and load them into the Xbox through a memory card.
ZDNet Australia's Patrick Gray reported from Sydney. CNET News.com's David Becker contributed to this report.