A sledgehammer.... I had one do it, finally got a refurbed with a warranty from gamestop... Then that pos died, but gave me a new one in box.
Your problem is exactly why I didn't want my friend to hack mine. He's quite knowledgeable about that sort of thing and has hacked many successfully, but I have a bad track record with voiding warranties.
You can reflash the factory firmware can you not? You can also google the issue and find several DIY guides for fixing the problemo
I have even heard people sending back hacked firware 360's and Microsoft still fixing them. I would recommend just flashing your stock firmware back on before you send it back.
Mine had the sticker removed and Microsoft still honored the warranty. I think they have so many problems they just fix them, no questions asked, now.
i had a first gen from the night of the release and the sticker was like that too and they still fixed it. but it may have just been cuz all the first gens were crap.. im now on my 4th.... all fixed for free though
What I did was tell them my teenage son opened the case trying to repair it but didn't touch anything once he got inside. I don't know if it made a difference though.