They are hardware coded. The dvd drive is "locked" to the motherboard. There is a process that can extract the keys and you can flash the eprom of the new drive to work with your motherboard.

I can fix your 360 for you, flat rate. PM me if you are interested.

I also do mods, I have a metalliac black case with window, green lights, high output fan, and a see through dvd drive in mine curently