There is a fix (but it requires a bit of work) to get the banned consoles to use HDDs properly. Also, I don't think updates work on them still.
The fix requires you to solder wires to make a port and dump the firmware data (takes like 45 minutes unless you have the internal memory card one, then it is like 4+ hours), using a hex editor to edit the firmware, then reflashing it to the MB. Now, your HDD will work on a banned console. Perfect!
You can no longer, however, unban consoles due to a dashboard fix that no longer allows you to get or edit the CPU key.