Is it like a softmod? When you update it to the latest dashboard does the IXTREME CFW get removed or does it permanantly stay after youve fashed the DVD drive eof the 360?
Yes, firmware is coded software so it's a softmod. The firmware can be restored back to stock or updated after it's been flashed. No, it doesn't get removed after a dash update.
A software-modification (like the Wii & PSP) is when you modify the existing software (dashboard, OS, etc), on the console. So when you do a system update, you are putting an official dashboard/OS back onto it, overwriting your existing software-modified dash. This means you are "stock" again and have to do another softmod, if possible.
Flashing a 360 drive with iXtreme firmware is technically a software modification because you're changing the firmware (which is software), but works a lot like a hardware modification (modchip), because only the drive has been altered to boot backups. Since only the drive is altered, a system (dashboard) update doesn't erase the iXtreme firmware. This is why for years we were able to do system updates with no problem whatsoever. The Kinect dashboard seems to be the only update ever to truly "cripple" our boxes, but even it will be solved soon. (my daughter & nephew bug me every damn day about it).
When the "structure" of the files on the game discs changes, it's called a new "wave" of games. New iXtreme firmware is really only needed in order to boot new game waves "safely for Xbox Live".
also its important to note that even though the kinect dash is flagging systems it isnt changing the fw. also new fw like LT and future FW do not care what wave you are trying to boot as they will boot any wave. the only reason older fw was made to not boot new waves was to protect users from booting an unsafe disc. so with LT and beyond it is on the user to make sure any discs are safe for live. this keeps the fw team from having to update every time a new wave is released.
